This is a guest post by Robert, he is 35 years old and he likes to share his knowledge online. He has been trading cryptocurrencies for the last 3 years. Robert thinks that Ethereum will become the #1 coin one day. You can follow him on twitter: https://twitter.com/Hidden_
Ethereum: A Bigger Deal than Bitcoin?
We know that Bitcoin is currently the most prominent of all digital currencies in existence right now so at first glance, that question appears more than a little redundant.
But we also know that Ethereum has been nipping at the heels of bitcoin for a while now despite being less than half the age of the daddy Crypto.
But has the battle already been won? Has Ethereum unofficially taken the crown from Bitcoin and is now only awaiting its coronation? We shall find out.
Ethereum’s token of choice for its blockchain is called Ether. The market cap for it is in the $800 million range. That makes it second only to Bitcoin but still, a very far second at that since bitcoin’s market cap is currently in excess of 7 billion. So to understand how Ethereum is rivaling the status of bitcoin in any considerable way, we need to acquaint ourselves with a basic overview of it as a cryptocurrency.
What is Ethereum?
Ethereum (official site is https://www.ethereum.org/) was the brainchild of one Vitalik Buterin who wanted to come up with a cryptocurrency that would contain both qualitatively and quantitatively advanced options over Bitcoin.
One of its most prominent features were the ‘smart contracts’, essentially self-executed agreements that answered to no central authority and were coded straight into the blockchain.
The first beta version came out in 2015 and had a blockchain that included a turing-complete scripting language capable of executing smart contracts across every node and could accomplish a provable consensus without any dependency on a third party supervisor like a judiciary.
The EVM can also run bets, satisfy contracts of employment, be an escrow when purchasing items of significant value, as well as sustain a legal gambling facility, also decentralized.
In short, smart contracts can potentially do away with any kind of agreement either financial, legal, or social.
For the time being, the EVM is still in early days and the execution of smart contracts is costly considering how much of ether is spent along with processing power.
Further developments in the protocol must take place in order to advance the system. So the more complex smart contracts are still a future prospect.
Ether is what sets the results of smart contracts that are run by the protocol and it can be mined or traded on exchanges with Bitcoin as well as fiat currencies like the US Dollar.
It is also the currency used to settle payments for computational work that is employed by the nodes on its blockchain.
Decentralized Autonomous Organizations
DAOs for short could be built upon smart contracts. They are in many ways similar to corporations, being involved in trade transactions as well as negotiating deals, human resources, working with budgets, and heightening profits, all completely independent of any human or societal input.
In short, this could end up being something as crazy as human beings being employed by fully autonomous machines.
DAOs is still only recognized as a concept that will become reality at some point in the future. On the other hand, decentralized applications or DAPPS are undergoing development for Ethereum at present.
These are standalone applications that are run on the EVM and use smart contracts. For example, there are reputation functions, P2P markets, schedulers, micro-payments platforms, and online gambling apps.
The defining feature of DAPPS is they are executed on a decentralized network and require no third-party overlooking them. If there is a multi-app party that is based on a central server, it can be promptly disintermediated by the Ethereum blockchain.
Inevitably, this will take in chatting, gaming, banking, shopping etc.
What Ethereum could do for various different applications is exactly what Bitcoin has done for currency and payments via its blockchain technology.
Thanks to the EVM and integrated scripting language, smart contracts can be developed to execute all manner of functions that answer to no central authority whatsoever.
With ether, nodes can be paid in exchange for the processing power to run such decentralized apps and ultimately full on decentralized and autonomous organizations. So yes, in a way it is only a matter of time before we see a new leader in digital currencies.