ETHEREUM – The New Generation Cryptocurrency
Updated: Sep 4, 2020
A cryptocurreny that is more affordable than Bitcoin, A currency that is less volatile than Stock Market... It's time for Ethereum
The concept of digital money has given birth to cryptocurrency. Just imagine a situation where you need to send or receive a huge sum of money without involving governing institutions like banks, without leaving any trace. But although our conventional banking system enables wireless transactions, it is not untraceable. That’s why the need for a decentralized currency or monitory system aroused. Thus, cryptocurrency like Bitcoin was born – the original cryptocurrency, based on Blockchain technology. There was no such thing called Blockchain before Bitcoin was invented. However, it is limited because it is written in a language called Turing Incomplete Language. That’s where Ehereum came into the picture.
In plain words, imagine Ethereum like an android. Similar to android technology, where you can build any type of apps be it transactional, chatting, retail, gaming, music, and more, Ethereum is also a network, based on which you can build Dapps (Decentralized Applications). It is open-sourced, so you can transact your digital money and access data-friendly services – no matter your background or location. In simple words, Ethereum is a community-built open-source network, based on which cryptocurrency named Ether (ETH) has been innovated. Ether also has digital coins just like Bitcoin. When it started in 2014, one Ether was valued to just 0.40 cents. But, now due to its wide popularity, it is valued at hundreds of dollars. Since money exchanged by Ethereum has no physical imprint and allows money to be tracked over the web, it can't be copied or counterfeited either.
Ethereum – The Smart Contract and Its Advantages
Ethereum is an extremely advanced technology that lets you send cryptocurrency to anyone no matter where they are in the world for a small fee. It also powers Dapps that everyone can use and no one can take down, not even owner who originally has written it. The DNA of all Dapps and Ether is Smart Contract. These contracts are written using the Ethereum coding language called Solidity. The principle behind these contracts is ‘If->Then->Then’. These are called smart contracts because they deal with all the aspects of the contract – enforcement, management, performance, and payment.
For instance, if you pay your landlord, then he will rent you his apartment, then you can live in it. It is simple logic, but here’s the issue. For instance, take this landlord has written this smart contract based on ‘If->Then->Then’ principle, and one month you fail to pay his rent on the due date, then you will be locked out. Even the landlord cannot open the apartment door for you. In normal life, the landlord might extend the due date, might give you a notice period to move out, but in the Ethereum network, the world runs on logic and code.
This might feel like a disadvantage to you. But, on the contrary, if you code your smart contract carefully, you can make your money work for you. It allows automated payments and deposits. Imagine being able to have your money invest, spend, and save all on its own. You can exchange not just money, but property, stock, and anything without having to go through a lawyer, notary, or some other service provider. It cuts down the need for any kind of middleman entirely. That is the reason many investors and big corporations feel Ethereum is a more lucrative option for them.
Disadvantages of Smart Contracts
1. Letter Strict – As we discussed the landlord-renter scenario, smart contracts are letter strict. They are intelligent. Therefore what you code is what you get.
2. Immutable – Once a smart contract is deployed into the Etherium network, it cannot be edited or corrected, even by its original author. The only way to change is to convince the entire network that a change should be made, which is impossible.
3. Difficult to secure – Unlike Bitcoin’s blockchain technology, Ethereum is built with the ability to create an extremely complex contract. But here’s the problem, the more complex the contract is, the harder it is to secure because there are more chances of interpretation and more clauses to include. Anyone can find a loophole in the contract and steal your money. Exactly what happened with The Dao. Therefore, it is crucial to ensure that the smart contract you are writing is 100% error-free.
Is Ethereum Worth Investing?
Now that you know the basics of Ethereum and Ether, you might be wondering if it is worth investing in, considering its disadvantages. But let us tell you why you should consider this over Bitcoin. Price. Yes, Ethereum’s price is its biggest advantage. Anyone can invest in Ethereum since it is way cheaper than Bitcoin. In Indian Rupees in today’s market price, 1 Ether = INR 27,877.88 whereas 1 Bitcoin = INR 8,28,031.92. Now, the next logical question is how you can make money by investing in Ethereum. Here’s how. You can buy Ethers from leading cryptocurrency platforms like StormGain, Coinbase, Kraken, Bitstamp, Gemini, Binance, and Bitfinex buy using credit or debit card and invest them in cryptocurrency exchange (think of it as an alternate stock exchange). Since the concept of Ethereum is still relatively new, you can invest as less as 1 USD and get investment returns up to 1400 USD. Now that is a good profit! The current value of Ether is 378 USD.
Conclusion: Ethereum, Yey, or Ney?
Ethereum is absolutely worth investing in. Considering previous years’ performance and success of the Ethereum network’s success in cryptocurrency exchange, it is safe to say, Ethereum is here to stay for a long haul. The world is yet to fully understand the importance of Ethereum in finance. All you have to do is do your research properly before investing. You must buy Ether or invest in Ethereum-powered businesses only after understanding investor’s smart contract complexity so that your money remains in safe hands.