Ethereum is one of the top cryptocurrencies in terms of price and recognition. It is second only to Bitcoin and contributed to a huge shift in the cryptocurrency ecosystem.
Many people believe that Ethereum was a catalyst that kickstarted a new era of cryptocurrency, opening the doors for innovators, entrepreneurs and competitors to enter the space. But what is Ethereum?
Ethereum is a platform
Ethereum was launched in 2015 and is a global decentralized blockchain platform. This means that you can build applications (actually referred to as decentralized applications) on top of Ethereum using the native coding language, solidity. Ether is the native currency of Ethereum and is used for all sorts of payments on the platform, including all fee payments.
Ethereum was also the first blockchain to introduce the innovative, game changing concept of smart contracts.
There are thousands of developers building on top of Ethereum, building everything from financial applications to games to decentralized exchanges. That’s the beauty of Ethereum – it’s a platform that enables developers to build whatever they like on the blockchain.
What are smart contracts?
Smart contracts are decentralized, self-executing contracts that have an unfathomable amount of real world applications.
A smart contract is just a piece of code, but it’s extremely powerful. It is written with the conditions of the contract which is then publicly stored on the blockchain. When the conditions are met, the smart contract will execute, triggering something to happen.
For example, a smart contract can be used as an escrow service that will only pay out when all terms of the agreement are met. This ensures that both parties are happy with the payment.
Smart contracts can also be applied to businesses. For example, they are now being widely used within the supply chain industry to track and monitor the supply chain process.
Ethereum and ICOs
Ethereum was the first blockchain platform and made the road to creating your own cryptocurrency much simpler. Instead of building your own blockchain you are able to build on top of Ethereum. It saves a huge amount of leg work and enables your currency to piggyback from a successful, proven network.
This led to a huge influx of new cryptocurrencies that were using Eth to build their token and then hosting a funding round called an Initial Coin Offering (ICO). 2017 was the most prolific year and has been referred to as the year of the ICO.
While Eth unintentionally caused an abundance of defunct cryptocurrencies, it also introduced the broader world to the power of blockchain technology. Without Ethereum, many of the highly promising cryptocurrency projects that we know of today likely wouldn’t exist.