3 July 2020
From its original days, Vitalik Buterin envisioned an open-source blockchain platform supporting decentralized apps across a range of industries. He made Ethereum unique as it is a multi-purpose platform in which outside developers can create their own software. As result, many entrepreneurs have used Ethereum to create disruptive solutions that will solve many problems in society.
Here, we first break down the features of Ethereum and then give examples of real-life applications in our current world.
1. Smart Contracts
These are contracts, coded into the Ethereum blockchain – they cannot be edited, censored, forged, removed, or interfered with by third parties.
No transactions can happen if the conditions of the smart contract are not met. This ensures security for any transactions made on the platform. Smart contracts are just like paper contracts only that they are hosted on the Ethereum platform, and can be accessed from anywhere in the world.
2. Decentralized Applications (dApps)
Decentralized applications (dApps), allow many creators to develop different applications and systems on the Ethereum platform. dApps run on several systems concurrently, on the same network. They also communicate with each other to complete specific commands. DApps make trades, exchanges, and other transactions easier, and provide a transparent digital trail.
Ethereum platform allows developers to create their own digital coins and host them on the platform. You can name your digital coin as you please.
Besides hosting several cryptocurrencies, including Ether, Ethereum has many wallets available. They allow you to keep track of your crypto as well as make purchases and payments anywhere. From buying a coffee to a house, you can do it all with Ethereum.
5. Decentralized Autonomous Organizations (Daos)
Autonomous and decentralized organizations (DAOs) are not run by a specific person and do not have a leader. They cannot be changed or reprogrammed, and once they are running, no one can stop them.
The whole idea behind DAOs is that no one runs them. They have no one to change them or reprogram them at all. Once they are running, there is nothing you can do about it. They were described as groups of contracts that can be funded by like-minded individuals by Stephen Taul, former COO of Ethereum. As long as a DAO’s survival costs are being met, it will stay on the network.
What Can Ethereum Be Used For?
1. Crowdfunding for new coins
Ethereum allows companies to create new digital currencies, also known as tokens on their platform. Speculators of these new coins can purchase them in an ICO using Ether. This is the same way Ethereum raised capital during the infancy of Ether. Other Ethereum-based protocols that have successfully raised capital are Augur ($5.3 million) and Golem ($8.6 million)
Augur is an Ethereum-powered betting platform that allows for automated payments without interference from anyone. Augur has assurance against fraud by having multiple reports of the outcome of the events forecasted, as opposed to a single report like in a centralized prediction market.
Augur has no limit on the number of bets or amount you can win, neither does it take a percentage of earnings.
3. Lending systems
In the US, credit reference bureaus handle massive amounts of financial data, making their systems prone to errors. Resolving errors in credit history and ratings can take forever, leading to a denial of loans and unfavorable interest terms. Decentralized lenders will however use your cryptocurrency as collateral, eliminating the need for credit reports. This will make it easier to get loans, and have more flexible repayment terms.
Decentralized insurance could eliminate the long periods of time that homeowners wait to be compensated after catastrophes. MetLife, a leading global insurer, is already using Ethereum to improve the claims process for its customers.
5. Identity systems
Media and tech giants store a lot of personal data, something which displeases a lot of people. Developers on the Ethereum platform are working on ways in which people can share personal information more privately with for-profit companies. For example, you can share your info when applying for a job and then shield the information again after the process is over.
Ethereum has very advanced protocols and functionalities such as smart contracts, DAOs, Wallets, dApps, and tokens. When applied to solve real-life problems, they can solve issues faster than traditional processes.