What is Ethereum and why is it a cryptocurrency that brings value to the ecosystem?

2 Mins read

When we talk about cryptocurrencies, one of the first that comes to mind is Bitcoin, since it is the main one with the highest monetary value in the market.

But, are there other cryptocurrencies equal or better than Bitcoin? Although this may vary depending on the point of view of each person, Ethereum is the second most valued cryptocurrency and with an incredible intrinsic value to the user.

If you want to know more about Ethereum, why you should buy it and what is its role in the market, keep reading this article.

What is Ethereum and when was it launched?

Possibly, you are thinking that ethereum (ETH) is a cryptocurrency that can be bought or sold and nothing more. But, no, it is more than that. 

In 2015, ETH, an open source blockchain and one of the first projects that allowed to have decentralized smart contracts in the crypto world, was launched on the crypto market. Quite a revolution for that time!

Since its inception, Ethereum has had an impressive user value and over the years, it has increased it. Today, with the decentralized network and being open source, with Ethereum new cryptographic projects can be born based on the network as immediate connect.

In addition, they allowed to increase their smart contract offerings by making them cheaper thanks to Ethereum 2.0 (which allowed them to drastically reduce commissions), building DeFi (Decentralized Finance) or NFT (Non-Fungible Tokens) platforms, all a success.

Thanks to all this value for users and new projects, the ETH token increased its value from 2020 which traded at $160 to $200 to $4,500 at its peak.

What is the value of Ethereum for the crypto user?

As we mentioned before, each cryptocurrency can have its own objective or value to contribute to society.

A clear example is Bitcoin, which was born as a digital alternative to FIAT currencies (Dollars, Euros or Pounds) to find value in a currency with a limited issuance and that, in the long term, is going to be scarce.

For its part, Ethereum found the value to bring and solve problems to society through smart contracts or decentralized finance, which do not need intermediaries and are verified by the Ethereum network.

What are smart contracts and decentralized finance on Ethereum?

Smart contracts on the Ethereum blockchain are the first useful tool of the network, very valuable, which allows to power the network in decentralized finance applications or NFT, where it performs agreements between wallet addresses automatically, without intermediation and at a low cost.

And, now, what are decentralized finance or DeFi? They are platforms that act as a banking entity, they offer their platform for users to leave money to lend to others for an interest rate and on the other hand, the applicant must leave his guarantee in cryptocurrency in case of not being able to pay.

What is Ethereum 2.0?

About a year ago, Ethereum decided to launch its 2.0 version, which brought incredible advantages to the public.

They decided to be a faster, more efficient and lower cost network by changing their mining or block validation format from a POW (Proof of Work) to a PoS (Proof of Stake). They went from relying on people mining and validating blocks through graphical boards to validating their transactions through people blocking their ETH to validate in exchange for a reward.

Ethereum Conclusion

There is no doubt that, Ethereum holds an incredible future and brings gigantic value to users. 

Their smart contract technology is doing well and it is predicted that this technology can be implemented in everyday activities such as banking transactions or legal settlements.

In addition, they are still working to make the network even cheaper to encourage more projects to migrate to the technology. Without a doubt, Ethereum has an incredible potential from now to 10 years. What do you think?

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