Why Ethereum is a Top Cryptocurrency to Watch in 2021
Ethereum, the second-largest cryptocurrency by market capitalization after Bitcoin, has been gaining a lot of attention lately. It is an open-source blockchain platform that enables developers to build and deploy decentralized applications (DApps) on its blockchain. Ethereum has been around since 2015, and it has been constantly evolving to enhance its functionality and user experience.
Introduction
Cryptocurrencies have been around for over a decade, and they have revolutionized the way we think about money and financial transactions. With the rise of Bitcoin, many other cryptocurrencies have emerged, each with its unique features and use cases. Ethereum is one such cryptocurrency that has been gaining popularity in recent years. In this article, we will discuss why Ethereum is a top cryptocurrency to watch in 2021.
What is Ethereum?
Ethereum is a decentralized blockchain platform that enables developers to build and deploy decentralized applications (DApps) on its blockchain. The platform uses smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Smart contracts allow for the automation of complex agreements between parties, reducing the need for intermediaries, and increasing efficiency.
The Advantages of Ethereum
One advantage of Ethereum is its network effects. The more applications that are developed on Ethereum, the more valuable it becomes as a platform. With over 2,000 decentralized applications built on Ethereum, it has become the go-to platform for developers looking to build blockchain-based applications. Additionally, Ethereum has a strong community of developers who are constantly improving the platform, ensuring its longevity.
Another advantage of Ethereum is its scalability. Ethereum is currently undergoing an upgrade to Ethereum 2.0, which will improve its scalability by switching from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism, which is more energy-efficient. This will enable Ethereum to process more transactions per second, making it more suitable for enterprise-scale applications.
Use Cases of Ethereum
Ethereum has many use cases, but the most popular one is DeFi, or decentralized finance. DeFi refers to financial applications built on Ethereum that enable users to access financial services without the need for intermediaries. DeFi applications include lending and borrowing platforms, insurance, and decentralized exchanges. The total value locked in DeFi applications on Ethereum has been steadily increasing, surpassing $60 billion in May 2021.
Another use case of Ethereum is NFTs, or non-fungible tokens. NFTs are unique digital assets that are stored on the Ethereum blockchain. They can be used to represent ownership of artwork, music, and other digital assets. NFTs have gained a lot of attention in recent months, with some NFTs selling for millions of dollars.
Conclusion
Ethereum is a top cryptocurrency to watch in 2021 due to its network effects, scalability, and numerous use cases. With the rise of DeFi and NFTs, Ethereum has become an essential platform for developers looking to build decentralized applications. As the platform continues to evolve, we can expect to see more innovative applications built on Ethereum, making it a valuable asset in the cryptocurrency space.
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