Ethereum is one of the top digital assets in the cryptocurrency ecosystem. It’s the second most famous and the second largest cryptocurrency by market capitalization, second only to Bitcoin. Ethereum’s claim to fame is its smart contracts capabilities. Until recently, it was the first and only general-purpose blockchain, with a Turing complete virtual machine and native programming language able to use code of any algorithmic intricacy. Ethereum is behind significant technological leaps. It powers the rise of decentralized applications (dApps)and the explosion of decentralized finance (DeFi), with more than $6.7 USD locked in as of August 2020. Today, Ethereum is Bitcoin’s Layer 2 network. There are 18x as many Bitcoins existing as wrapped tokens on Ethereum (RenVM, WBTC), than there are BTC locked on the Lightning Network. Ethereum is on the brink of a colossal change to the way its network functions, moving to a Proof-of-Stake (PoS) consensus mechanism. This will dramatically decrease the complexity of the cryptographic work and lead to massive throughput gains for the whole network. As the COVID-19 pandemic has awakened the global economy, Ethereum could be the the technology that powers alternative and programmable forms of finance that people are seeking.
Ilias Louis Hatzis is the Founder and CEO at Mercato Blockchain AG.
Ace of Hearts: Programmable Money
Often people say Ethereum’s advantage over Bitcoin is that it is programmable. Since Ethereum launched in 2015, it has proved smart contracts are possible. While Bitcoin promised the elimination of middlemen, Ethereum made it a reality. Ethereum allows developers to write computer code for financial transactions. That’s why some people call it programmable money.
With quickly changing economic needs and a world that looks very different than it did 12 months ago, the way we manage and spend money will change. Ethereum is at the very heart of a big banking reset.
Just look at what’s happening with DeFi. Ethereum’s smart contracts, have allowed developers to build all the services you can get at a bank.
You can lend your Ethereum and earn interest on it. You can borrow Ethereum. You can use it to get insurance on your crypto holdings. And you can build an automated crypto portfolio with it.
While Ethereum is looking more and more like a bank, it’s more efficient, open, transparent and offers products that traditional banks cannot offer. As we see things like credit scoring on Ethereum, we could see even more banking products like mortgages, car loans, student loans, and more.
Ace of Clubs: Income-generating asset
Ethereum is undergoing one of the crypto industry’s biggest changes. Ethereum is converting to a new consensus mechanism called proof of stake (“PoS”). With PoS, the network is secured by users “staking” or locking up their crypto, as a pledge that they won’t cheat the system.
In today’s zero-interest-rate world, decent yields are hard to find. If you’re looking for yield today, you have to look beyond traditional assets. With Ethereum’s new consensus mechanism, investors will be able to stake their cryptos and earn yields.
Staking is similar to renting out your house with Airbnb. You own your house, but you’re giving up control for a short period in exchange for a financial reward.
Staking doesn’t require powerful computers, making it cheaper and less energy-intensive. It also promises faster, cheaper transactions, and, most importantly, better scalability than proof of work (“PoW”). Staking will essentially make Ethereum an income-generating asset, which could drive people to hold it for the long term.
Ace of Diamonds: Developers and Applications
Within the crypto community, developer activity is an important indicator for the success of a blockchain and the price of a cryptocurrency. While the exact numbers of active Ethereum developers are hard to find, Ethereum has the largest community of developers.
In August last year, ConsenSys published a report that showed 1,243 active developers working specifically for Ethereum in June 2019. The report also stated that 18% of all open source crypto developers work in the Ethereum ecosystem. In addition, Ethereum had four times more developers than the next ecosystem, which was Bitcoin.
Since Ethereum launched in 2015, numerous competitors (EOS, Neo, Tron, and Cardano) have entered the dApp scene, with competing approaches, mainly more efficient mining algorithms. Yet, Ethereum still remains the “King of dApps”. The “2020 Q1 Dapp Market Report” published by Dapp.com clearly demonstrates the ongoing trend, as the statistics show that 635 dApps, or roughly half of all functioning dApps on the market, are based on the Ethereum network, with 616,369 active users.
Ace of Spades: An Open Innovation Ecosystem
The Ethereum economy is an open ecosystem that is not controlled by any anyone, and can be used by developers anywhere to provide people access to innovative products, like bank accounts, exchanges, exchange traded funds, derivatives markets, lottery systems, gambling sites, virtual reality land, gaming items and digital collectibles.
This is an extremely powerful driver of innovation. No one can stop or censor anyone with an Internet connection from developing services on Ethereum or accessing these services. Ethereum is an open financial system. Just like the Internet changed the way we moved data, Ethereum is changing the way money works.
All these things are exactly what Ethereum needs for mass adoption.
As the bull market begins, crypto’s user base will grow by ten times or more, the industry’s entire market cap will explode into the trillions, and many cryptos will soar thousands of percent. With Ethereum we are seeing a major transition to individual autonomy, displacing existing financial markets and creating new products we can’t envision yet, just like Facebook, Amazon and Google.
Stay tuned. Exciting times ahead.
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