Imagine a world where transactions between one person and another are fully automated. That’s what Ethereum is trying to do!
Today we’ll be taking a deep dive into what Ethereum is , what differentiates it from Bitcoin, and how it looks like an investment for 2022.
What is Ethereum?
Ethereum is both a cryptocurrency and a blockchain platform that allows users to establish “smart contracts” that automatically execute transactions once the conditions are met. Ethereum has gone through exponential growth, going from a value of $11 to over $4,700!
Ethereum operates on a blockchain network just like other cryptocurrencies, allowing users to make transactions without central intermediaries like banks.
What are Smart Contracts?
The best way to explain how smart contracts work is by showing you how contracts work on apps that revolve around transaction systems like Uber and Amazon. When you order a ride, Uber takes a cut from the payment you give the driver to facilitate the transaction. The same goes for when you buy an item from Amazon or other online shopping sites.
Ethereum wants to make that process quicker, more efficient, and cheaper for both parties. That’s where smart contracts come in!
Smart contracts are essentially just contracts with conditions that must be met for the transaction to be completed. These transactions happen and are facilitated in the Ethereum network. The currency used for smart contracts is called “Ether” or ETH, which has a value of $4,070 per coin.
Key Differences Between Ethereum & Bitcoin
Unlike Bitcoin and other cryptos, Ethereum isn’t a decentralized currency that runs on a blockchain, making interactions transparent. Because transactions through Bitcoin happen through the blockchain network, it doesn’t need things like banks or other third-party institutions to legitimize the transaction.
While Bitcoin functions similarly to a form of currency, Ethereum works way differently. Though Ethereum has a coin used for its transactions, the real value of Ethereum comes in the form of its smart contracts!
Another difference between the two cryptos comes in the form of supply. Bitcoin can only have 21,000,000 BTC in circulation while Ether can be infinitely created. Transactions made with Ether or in the Ethereum network take a few seconds to complete, while ones using Bitcoin can take minutes.
Should You Invest In Ethereum?
Not many people would willingly invest in cryptocurrencies because of how volatile the market is. The constantly fluctuating values in price and the uncertainty of its use in the future are what make crypto investments so dangerous.
However, Ethereum’s value is way too huge to ignore. Ethereum is currently the most used cryptocurrency platform in the world as of today, especially now that NFTs are all the rage. You do have to consider the possibility of its value changing a lot due to how many people are currently implementing it for smart contracts and how many coins are circulating in the market.
Just like other coins, Ethereum is also subject to potential regulation, especially now that some countries are planning on outright banning cryptocurrencies as a whole; an example of this is India. Just like most investments, just be aware of any of the outside factors that can affect the value of Ethereum before you dump your life savings into it.
Be sensible with your investments; make sure to keep in mind the risk that comes with investing in cryptos as a whole. Don’t put all your eggs in one basket and risk losing all of your money.
Ethereum is an amazing investment with great value because of how it revolutionizes the way we look at transactions between users. With tons of potential, investing in Ethereum has a high chance of giving you big gains in 2022!
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