It’s not uncommon to hear people ask about Ethereum’s real-world use cases. Everyone’s wondering what they could do with their digital asset and what advantages owning it could bring. If you also have similar questions, you’re in the right place to learn interesting things about Ethereum’s use cases.
This blockchain platform allows everyone to develop decentralised applications on it. The high security and transparency of the blockchain are one of the reasons developers use it to create different apps and products. The platform is fueled with Ether, the currency and asset investors own to diversify their investment portfolios or generate long-term profits. The Ethereum price USD fluctuates a lot as digital currencies are volatile assets, but this aspect also appeals to seasoned traders looking to make a quick buck. However, long-standing cryptocurrencies like this one and Bitcoin are equally good long-term investment options, as they’re the pioneers of cryptocurrencies and not just a fad.
As you can see, Ethereum is a popular way to increase investment performance while minimising risks, and it’s not planning on leaving its high position. Read on to discover its vast and fast-expanding use cases.
Ethereum Blockchain Background
The innovative decentralised network of Bitcoin and the cryptocurrencies that followed in its footsteps were ground-breaking achievements. Ethereum raised the bar and expanded on its predecessor’s vision of a decentralised payment system. Thus, developers created a global computer network that connects users to a marketplace of dApps, or decentralised apps, that provide unprecedented security, efficiency, and user control. Ethereum’s use cases expand to a plethora of innovative applications in the following sectors:
- Supply chain management
- Identity management
- Web browsing
The blockchain, powered by the native currency – Ether, permits the creation of ETH-based tokens that power dApps through smart contracts.
dApps – the way towards censorship resistance
dApps are software apps that exist on smart contract blockchains like Ethereum and incentivise network participants with token rewards in exchange for validating transactions. From a user perspective, the online experience is similar to that of centralised apps. DApps in the DeFi, for example, mimic the characteristics of banking apps or centralised brokerage sites. However, they require that users own a compatible crypto wallet instead of logging in with a username and password.
There are thousands of dApps worldwide, ranging from insurance and health to gambling and gaming. While exchanges and games are the most popular categories in Ethereum dApp activity, banking apps have gained interest in recent years.
Many Web3 participants want to develop a censorship-resistant social media network that can compete with Twitter and Facebook. Even though these are still in their early stages, several platforms utilise blockchain on their back end.
Take, for instance, the Web3-based “social graph” that Lens Protocol is developing. It aims to enable participants to own, share, and sell their social media content.
The benefits of dApps include the lack of censorship, securing user privacy, and development flexibility.
NFTs – the “one-of-a-kind” assets
NFTs (non-fungible tokens) are part of cryptocurrency’s evolution, and each one is unique in code and built on smart contracts through the Ethereum blockchain. While these codes may be collectables in their own right, NFTs gain value when combined with the following:
- Events on the NFT market
- Game pieces
- Trading cards
- Digital art
As with any technology, they’ve also had humble beginnings, with CryptoPunks being the first notable crypto art collection that resembles how NFTs are seen today. These 10,000 generated pixel art characters, developed in 2017 by Matt Hall and John Watkinson, kept rising in value within the NFT art space.
As more individuals discovered and explored the crypto niche during the pandemic, new companies and artists started to develop their own NFTs with new utilities and designs. The future opportunities for these digital assets are endless and only limited by imagination.
DeFi – the revolution in finance
Ethereum gained popularity thanks to its decentralised (DeFi) feature. In layman’s terms, it refers to eliminating the implication of banks or any other financial institution in payment execution. The DeFi ecosystem has developed an extensive network of integrated protocols and financial tools and turned out to be one of the most leveraged sectors in the blockchain field, with infinite use cases for organisations, developers, and individuals. Ethereum’s fundamental principles enhance financial security and transparency and support a standardised system. The features are:
Smart contracts – a new way to do business
Smart contracts are self-executing contracts that verify, improve, and enable transactions on the blockchain. Based on if-then logic, these computer programs are a critical innovation in blockchain and Ethereum. They remove the need for third-party verification, enabling digital contracts and facilitating the buyer-seller agreement that’s written directly into lines of code.
No central authority is required because anonymous parties carry out the verification process in the network, which is why smart contract execution on Ethereum is decentralised. The transfer of currency and assets is secure and trustworthy, just like the identities of the entities on the network.
After completing the transaction, the accounts are updated accordingly, which develops trust between the parties.
Other promising Ethereum applications
Besides smart contracts, dApps, DeFi, and NFTs, Ethereum has several other applications. Crowdfunding via initial coin offerings (ICOs) is a significant use for Ethereum. Many companies have already launched ICO platforms to help users develop a new digital currency, which might offer developers, investors, and consumers more freedom than before. Other applications include the following:
- Digital identity management.Identity theft is a real issue in the information age. Still, Ethereum apps provide the solution to stop identity theft and fraud by developing and maintaining digital identities through components like embedded encryption and identity management.
- Health applications.Ethereum aims to improve the healthcare space as hospitals worldwide can access and store patient records securely.
- Payment gateways.Among the best Ethereum uses is for remittances and payments as it eliminates transaction fees in money transactions.
Ethereum and blockchain are new technologies, and their benefits have yet to be fully realised.
The extent to which they will be employed in the future is unclear, but one thing is clear: progress exists.