What makes Ethereum one of the most popular cryptocurrencies?
The cryptocurrency market has grown constantly over the last few years since the first digital currency, Bitcoin, was created. Ethereum, a digital currency launched on July 30, 2015, is also popular and has gained a reputation of being an asset with intrinsic value. From the moment it first appeared, it has grown impressively over the years, which is why so many investors consider this cryptocurrency. And despite the many highs and lows in the financial market regarding the Ethereum price, this digital currency secured its position as one of the most important and successful cryptos.
To discover why Ethereum is so popular, we have to go back to the beginning and see what it is and how it achieved its reputation. So, let’s take a look and find out vital information about Ethereum.
About Ethereum
Ethereum was created in 2015 by the programmer Vitalik Buterin, who wanted to give people another alternative that manages to overcome the shortcomings of Bitcoin. And he achieved his goal, as Ethereum is a decentralized computing network made on blockchain technology and a platform that allows peer-to-peer transactions, global payment and app building. Ethereum has its own native token, Ether or ETH, the platform’s digital currency, that facilitates all its operations. Therefore, with ETH’s help, people gain access to all its features, from where they can purchase goods and services or invest to generate future profits. What is revolutionary about Ethereum is that on the platform, people can create smart contracts, develop decentralized applications (dApps), and transact and communicate directly without any third party.
Over the years, there have been many comparisons between Bitcoin and Ethereum, as people wanted to discover which one has the biggest potential. Most of them made Bitcoin the winner, as it was in the game for a longer period and it has a huge market capitalization. Still, Ethereum is also an important cryptocurrency, which is why some believe it might surpass Bitcoin sometime in the future because of its innovations. What is new about Ethereum is the fact that this platform can be used to sell and buy digital artwork and gaming technology. Unlike Bitcoin, Ethereum is more than a cryptocurrency, as it represents a blockchain-based platform composed of several features. And due to the advanced blockchain, the transactions made on Ethereum are faster and more secure. For example, a Bitcoin block’s time is 10 minutes, while Ethereum’s GHOST protocol does a block time of 12 seconds. Another difference is that Bitcoin has mined two of its third available supply parts, while the supply of Ethereum is unlimited.
What made Ethereum so popular?
There are many reasons why Ethereum is so popular, but the most important ones are the following:
It has an extensive network
Ethereum has a large network that has been constantly tested through the years. Also, it has the largest ecosystem in cryptocurrencies and blockchain and a big and committed global community. Besides being a digital currency, Ethereum also benefits from other functions like financial transactions, storing data for other applications, or the presence of smart contracts. Plus, with the help of Ethereum, people can avoid intermediaries, such as lawyers or banks. This is why there is no need to interpret and write contracts or consider anyone as an intermediary in financial transactions.
It has a constant innovation
Ethereum developers are constantly looking for ways to improve the network and create new applications, which is one of the reasons why it is so popular. The many upgrades of the platform keep making the headlines and offer people a better experience.
It has a disinflationary supply
Another reason investors opt for Ethereum is because it has a disinflationary supply, unlike Bitcoin, which has a finite one. The supply of Ethereum evolves in accordance with the disinflationary mechanism, where if the value of Ether increases, there will be fewer coins in circulation. This is why investors always check the Ethereum price over a longer period before selling and buying to ensure their transactions will be profitable.
It is characterized by speed and scalability
There is a big difference between Ethereum and Bitcoin regarding the primary metrics. The popularity of Ethereum was also made because it has a better speed, which can only improve people’s experience. For example, Bitcoin block time is 10 minutes, while the Ethereum one is around 10-15 seconds. Also, the time needed for a transaction to be completed is longer in Bitcoin, which needs approximately 40 minutes, instead of Ether, which is ready in just 5 minutes.
It benefits from a proof-of-stake model
Even though, in the beginning, Ethereum had a proof-of-work model like Bitcoin, it soon changed to a proof-of-stake model, which really drew the market’s attention. The new model has gained interest, as it was something new and reformed the rewards system. The old model triggered consequences for much malicious behavior and didn’t encourage collaboration. Instead, the proof-of-state model removes the cryptographic challenges and changes miners with transaction validators. A validator can be anyone who owns Ether and can certify the block’s validity with their coins on the line.
Final words
There are many reasons why Ethereum has gained such a big popularity among investors, as despite being a young project, Ethereum achieved great things relatively quickly. The innovation it brought also helped the platform have more popularity, as there, people found many alternatives that the other cryptocurrencies don’t offer. Also, the innovations of Ethereum don’t stop at what was made in the past, as they are constantly trying to develop new things to improve the users’ experience. Because of that, experts see Ethereum as a one-of-a-kind platform that has limitless potential. This is why in an ever-changing cryptocurrency world, Ethereum represents a standout, and many investors believe that this digital currency might overtake Bitcoin somewhere in the future.