Despite it being over a decade since Bitcoin’s initial release, as well as the ubiquity of cryptocurrencies offered as a financial trading option, the layman still doesn’t really understand the processes behind crypto. Indeed, let’s be honest about it: Many experienced investors don’t really understand what’s going on ‘under the bonnet’ of the cryptocurrency vehicle either.
Of course, one could argue that many of those investing in crypto don’t really care about the mechanics of it. The main concern is profit, regardless of how that is achieved. Still, knowing a little about what occurs can help investors make smarter trades and bigger profits.
It’s well known that cryptocurrencies have different uses. Bitcoin, for example, is designed to be a pure digital currency that bypasses traditional financial institutions, whereas Ripple (XRP) is branded as more of a cross-border payment solution, one that aims to be used as a solution by big banks rather than replace them.
Ethereum Is More Than A Digital Currency
However, among the top cryptocurrencies, one could make an argument that Ethereum, which is the second largest crypto by market cap in 2019, is the most intriguing. First of all, let’s deal with the misnomer: When you buy Ethereum, you are actually buying or trading Ether.
The latter is the cryptocurrency, whereas the former, Ethereum, is the blockchain-based platform and operating system. Don’t be too worried about the difference, as the terms have essentially become interchangeable.
Why, then, should we judge Ethereum to be more interesting than other cryptocurrencies? For many, it goes back to Ethereum’s founding goal – to ‘decentralize the internet’ with the use of decentralized applications (DApps).
Just as cryptocurrencies aim to remove the need for third parties (banks) in financial transactions, Dapps are designed to upend the role of third-parties (Google, Amazon etc.) on the internet. Again, this might not sound very exciting.
After all, the internet ‘feels’ pretty decentralized already. But the possibilities it throws up are fascinating, especially when it comes to investment opportunity. Indeed, Ethereum has been cited as the backbone of the ‘new’ internet.
Removing The Need For Third-Party Permissions
Consider if you build an app for your business, making it compatible with, say, the Google Play Store, Apple App Store or Facebook. You have to be confident that these third-parties will always host your app and that the rules won’t change. In short, you have to agree to their terms. Ethereum is seen as ‘permissionless’.
It can be used by anyone, for any purpose, without needing third-party permission. Much of this decentralization has to do with smart contracts, or, in the case of Ethereum, smarter contracts. Huge amounts have been written already on how smart contracts could revolutionize not only business, but social interaction too.
But it’s enough to say smart contracts are at the heart of Ethereum, and it’s enough to excite the likes of JP Morgan and Microsoft who created the Enterprise Ethereum Alliance in 2017. For those wishing to invest in the cryptocurrency and wanting a compelling reason to do so, it’s worth noting that Ether fuels contracts on Ethereum.
In a way, Ether is the currency of smart contracts, and that throws up many intriguing possibilities for the future. There is no rule to say that investing in Ethereum will be more profitable than investing in Bitcoin, Litecoin and so on. But its differences, its goals and the impact it could make on our businesses make it perhaps a more interesting asset to invest in.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.