- Decoding The Science Of Ethereum & Its Top Use Cases
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Ethereum has been called one of the most important inventions since the arrival of cryptocurrencies. The marketplace of ethereum is also expanding each day (look at the following statistics).
However, not every business has a clear notion of what this technology is and how they can use it. Thus, in this article, we will discuss Ethereum & its use cases.
So, let’s take a glance at aspects of the ethereum blockchain and its use cases.
What Is Ethereum?
Ethereum is a cryptocurrency and decentralized computing platform built by Vitalik Buterin in 2013. It allows people to build applications related to finance, law, etc., without requiring centralized software or servers.
Moreover, Ethereum can be used as a foundational layer for new blockchain-based projects having built from scratch using its own smart contract scripting language. Not just this, Etheressum also allows users to create their own decentralized applications.
Due to its great popularity, Ethereum is often called a “world computer,” because its blockchain can be used to power other applications in addition to financial ones. Furthermore, Ethereum has been incredibly successful so far, and it looks like its popularity will only continue to grow in the years ahead.
Therefore, IT companies are witnessing great demand for ethereum blockchain developers to deploy this technology into various business verticals. Besides, the usage metric of the ethereum blockchain is expanding each day.
But! Before gleaning more into ethereum & its use cases, let’s understand more about how ethereum and blockchain technology are comparatively proportionate.
How Does Ethereum Works?
Like other cryptocurrencies, ethereum to uses blockchain technology. The primary purpose of using a blockchain in ethereum is to secure transactions. On top of that, it also provides decentralized control.
Succinctly, it is a shared public ledger called “The Blockchain” that records every transaction between users so that any change made can be tracked back easily without any risk.
Unlike other digital currencies like bitcoin or ripple that are managed by one central agency, no single entity manages ethereum currency. It uses an underlying technology platform that was created using an advanced protocol named Ethereum Virtual Machine (EVM).
More importantly, ethereum uses blockchain technology but not like any other cryptocurrency. Altogether, it uses smart contracts in a slightly different way to bitcoin or ripple.
To understand the use cases of ethereum, it is critical to know a little bit about smart contracts. The word contract suggests an agreement between two parties, and once terms are agreed upon by both parties, no one can undo them until conditions are met, and this happens in a digital environment of the ethereum blockchain.
Smart contracts are not just a theory; they already exist. The most famous smart contract that we all are familiar with is vending machines; these smart vending machines sense coins or notes inserted into them.
Once you insert a coin or note, it triggers a mechanism that automatically dispenses the required product after completing pre-defined conditions. If you want to leverage this concept, an ethereum development company can help you understand how this mechanism can benefit your business, depending on the industry you are associated with.
While the smart contract is a critical subset of ethereum technology, using this mechanism within your system can bring great ease in handling users’ or clients’ data/information.
Moreover, you need to understand how ethereum works to think about its application within your organization.
So, let’s understand its core mechanism.
Ethereum is based on blockchain technology, and it works similarly to the way blockchain works. So, all we need to understand is how does ethereum use blockchain.
In simple words, a blockchain is just a distributed ledger that records all transactions across many computers in such a way that tampering with data becomes almost impossible.
Each block on a blockchain holds batches of individual transactions between users; these blocks are encrypted so that they can be publicly verified but not altered.
Besides, these pieces of information are constantly being checked against each other, which makes altering or faking any transaction virtually impossible.
The only way for someone to hack a transaction would be for them to gain access to 51% or more computing power than everyone else on that network.
As long as more than half of all computing power stays honest (aka decentralized), any one person will not have enough power to compromise trust in any single transaction.
This prevents fraud from occurring anywhere within the system. In addition, because every blockchain contains all historical transactions since its inception, eliminating centralized control. This aspect allows for greater transparency and accountability.
Moreover, it enables anyone to verify a specific transaction if it was completed correctly. This helps promote trust even among people who do not know or don’t fully trust each other.
As a matter of fact, Blockchain platforms are still largely at their infrastructural stages. Although Ethereum arguably is one of the more evolved implementations.
Its value token is called Ether which you mine (or rather get rewarded) for contributing your computer power towards verifying blocks across its network. In short, ethereum is an improved decentralized system and a better version of the blockchain system.
Furthermore, an ethereum development team consists of a variety of coders that work on different aspects of ethereum blockchain development, such as transaction modeling, smart contract development, data security, and so on.
It’s all because implementing all concepts of the technology requires skill & a great length of time. From these aspects, Now You have understood how ethereum works and how it is different from other blockchains. Still, you must be wondering where you can use Ethereum.
So, let’s not fall for assumptions and understand some critical use cases of ethereum blockchain in the current marketplace where digital transformation is at its peak.
One of Ethereum’s most exciting use cases is for payments and remittances. The ability to send money globally without any fee makes it a feasible option for users who need to send small amounts overseas.
However, making payments using cryptocurrency isn’t as simple as sending digital cash. Transactions still need to be confirmed on a blockchain by miners before they can be considered complete.
Payment gateways infused with crypto or ethereum allow users to store their funds in an account that converts tokens into fiat currency (like dollars or euros) when a transaction occurs.
Users then have full control over their funds until they choose to convert them back into cryptocurrency.
One application for Ethereum’s blockchain is crowdfunding via initial coin offerings (ICOs). Companies like Bancor and Storj are making it easy to launch a new digital currency or platform.
This leads to an emerging economy that gives consumers, investors, and developers more power than ever before.
Here are some interesting platforms leveraging ICOs as funding mechanisms: Golem. Golem enables users to rent out cycles of other people’s PCs.
This platform enables rent-compute nodes on demand, in exchange for Golem tokens (GNT), by integrating with their Ethereum wallets.
Thus, you can let others use your computer resources while receiving compensation. Think of it as monetizing computer hardware/software which would otherwise go unused without someone paying to use them.
These types of apps run on a P2P network without any central point of failure. Moreover, apps like Metamask, uPort, EtherDelta, etc., can be built using the Ethereum blockchain.
Actually, these solutions are powered by smart contracts. Every transaction that happens in these applications has to go through them and is recorded on a public ledger.
The purpose of creating a decentralized app powered with ethereum is to remove dependency on central power & infuse more transparency. Furthermore, any business can create Dapp by opting for ethereum blockchain development services.
Moreover, Applications like Golem and Augur help users discover how their computing power can be put to use. It takes place when users rent out its system to others who need it, and the platform helps to compensate them accordingly for their efforts.
Golem connects users who have spare resources with those in need of processing power for AI/machine learning purposes. And guess what? It uses Ethereum’s peer-to-peer framework as well!
Digital Identity System
There is still a long path to go before blockchain-based identity solutions are ready for prime time. Moreover, it’s becoming increasingly clear that blockchain has utility in digital identity systems.
The Bitnation project is creating an entire governance system on top of the blockchain. Altogether, Microsoft has patented an application that utilizes blockchain-style public ledgers as a secure identity management solution.
With its decentralized nature and open source code, blockchain technology represents a major opportunity to create more secure digital identification solutions.
A smart contract is a stack of promises written in code that can be read by computers and evaluated according to its rules. Because smart contracts run on the blockchain, they also require no trust from either party — no need for a central authority or external enforcement mechanisms.
This allows them to function as financial assets, physical assets (for example: car keys), or reputation systems. Moreover, Smart contracts allow developers to create applications that don’t rely on third parties.
A lot of projects are building their applications using Ethereum as a platform because it is secure and easy to use. Moreover, many tools are already created for developers, such as Mist browser, which acts as an operating system for ETH.
Internet Of Things
Every day, we’re adding more and more IoT devices to our networked homes. We have thermostats that control our air conditioners and furnaces, speakers that play music through Spotify, phones that talk to laptops and TVs, and watch faces.
All these devices are already connected by default, but they’re almost all siloed in their own separate universes. Blockchains like Ethereum promise a way to connect them all together in one giant network and inbuilt more security for data.
Business On Blockchain
Some companies are already leveraging the advantages of a decentralized ledger to make their businesses more efficient. Take LO3 Energy, for example.
The New York-based startup is using blockchain technology to facilitate green energy trading between neighbors. By cutting out middlemen, it has slashed costs and increased transparency.
It’s one example of how ethereum smart contracts can be used in business — without having an external enforcement agency like a government or bank enforcing them. There’s another aspect that comes into play with such smart contracts: identity verification.
Owing to all of these aspects, businesses are driven to run the business on a Blockchain network. If you are thinking out loud to infuse a blockchain like ethereum within your business, you can hire ethereum developers with expertise in Dapps development & BaaS.
Ethereum is a blockchain-based technology that enables developers to build and deploy decentralized applications. Moreover, the most widely used application of the ethereum platform was as the foundation for the digital currency ether (ETH).
Furthermore, creating ethereum based blockchain platforms is also trusted for a more advanced ecosystem & security. Thus, enterprises are eager to try this technology in a variety of ways to boost organization productivity, data security, and transparency.
Therefore, blockchain development services are gaining more demand in the current arena & ethereum is one of the most sought-after.
- Date of publication:
- Fri, 01/14/2022 - 00:00
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