If you’re completely new to crypto, you’ve probably looked mainly at Bitcoin. As you’ve been searching, you might have noticed prices for “Ethereum” on the sidelines, also. Many people consider Bitcoin to be the “main” cryptocurrency. It was the first crypto token ever created and is the most popular.
Ethereum and its ETH token are right behind Bitcoin in terms of popularity. However, it has quite a few key differences. Right now, Bitcoin is mainly used for investment purposes. Buy low, then number goes up. Or buy high, and watch your money go down.
Ethereum can also be used for investments, but they’re quite a few more uses for it that we will discuss. Note that these are just some uses on Ethereum. Due to the nature of blockchain, uses are virtually infinite.
Launching Tokens on Ethereum
Ethereum runs on a network on which people can create their own tokens. The most common type of token created on Ethereum is an ERC-20 token. For example, the popular Shiba Inu token is an ERC-20 token.
In Ethereum, tokens may represent almost anything:
- reputation points are awarded on an online platform
- a gaming character’s abilities
- tickets for the lottery
- financial assets, such as a company’s stock
- a fiat currency such as the US dollar
- a gram of gold
- and more
Maker (MKR), Basic Attention Token (BAT), Augur (REP), and OmiseGO are just a few of the well-known digital currencies that utilize the ERC-20 standard (OMG).
If you want to buy any digital currency that’s been released as an ERC-20 token, you’ll need a wallet that’s compatible with these tokens. Fortunately, since ERC-20 tokens are so popular, there are a plethora of Ethereum wallet choices. Some of the most common are Metamask and Trustwallet.
Interacting with NFT Platforms
Non-fungible tokens (NFTs) — sometimes known as “nifties” — are unique, indivisible, and provably rare digital assets that are used in gaming, fine art, and luxury goods provenance. Due to the recent success of CryptoKitties, there has been a significant increase in the use of NFTs across several industries.
The majority of NFTs (Non-Fungible Tokens) are produced utilizing the ERC-721 token standard, which was established by the creators of CryptoKitties. A number of noteworthy developments have occurred in the field of NFTs since CryptoKitties’ reputation as the first application that used non-fungible token technology gained popularity in 2017.
To this day, NFTs are found in many fields, including games, collectibles, and art. Also available on digital markets like OpenSea and Nifty Gateway, non-fungible tokens may be purchased, sold, and exchanged.
Using NFTs helps digital artists and collectors by providing many advantages. Before NFTs, the authenticity of digital art was not verified, making the business more difficult to commercialize. By using blockchain technology, unique digital art like NFTs can be tracked, as well as the origins, legitimacy, and scarcity of that art.
SuperRare, Nifty Gateway, Know Origin, and MakersPlace are some of the most prominent NFT art markets. The mainstream art world has started to pay attention as well.
Christie’s New York has sold the first piece of NFT art ever sold at auction: a circular panel that has 300,000 digits of Bitcoin code, each of which can be read to determine its current position and time of day.
Using Decentralized Applications
Web services developed on top of a blockchain are known as decentralized apps (dApps).
Using a blockchain like Ethereum means users don’t require participation or verification from companies (ex: PayPal for payments) and every transaction is transparent, meaning you can see everything that happens using an Ethereum explorer like Etherscan.
While dApps may be built to offer any kind of online service (for example, games, file-sharing networks, and social networking platforms), the most frequently publicized use of dApps is in financial services, as shown by the significant development of decentralized banking (DeFi).
One of the most common DeFi applications are lending and borrowing DApps. For example, users are able to lend out their tokens on the Aave protocol for a certain APY percentage. Similarly to a bank, users can deposit a certain amount of tokens and get back a certain number based on the APY of the asset.
Users can also take out crypto loans on Aave, provided they put up collateral and pay a certain amount of interest.