As the second biggest cryptocurrency by market capitalization, Ethereum has significantly improved the crypto market. It introduced and perfected smart contracts, decentralized applications (dApps), and decentralized autonomous organizations (DAOs), contributing to a flourishing ecosystem.
Moreover, Ethereum is continuously improving, as seen through its roadmap, which includes a series of improvements over a few years. The initiative will make transactions cheaper, the network safer, and the user experience more valuable. While the roadmap might change over time, it will definitely influence the Ethereum price in USD, as technological developments always boost the value of a cryptocurrency.
But besides updates and possible opportunities, what can Ethereum truly offer to the real world? Let’s explore all of its potential use cases.
Ethereum is a reliable payment method
Decentralized payment methods have become more popular lately as traditional systems are flawed. These types of payment usually take longer to process and can be pretty costly for international usage, which is why cryptocurrencies like Ethereum are more efficient in handling transactions.
Using Ethereum eliminates the need for third parties to manage the transaction, minimizing processing times and making the transaction more affordable. In addition, sending and receiving money through Ethereum is fast and accessible worldwide.
Considering these benefits, multinational payment card services such as VISA have collaborated with Ethereum developers on several projects. The latest is the Visa Tokenized Asset Platform (VTAP), through which banks will be able to experiment with blockchain-based tokens and connect to both digital and fiat markets.
Ethereum is a valuable tool for DAOs
Decentralized autonomous organizations are the opposite of traditional organizations, since they operate without central leadership. Such communities are governed by their users, following a specific set of predefined rules of the blockchain.
Therefore, smart contracts help DAOs automate and work efficiently, executing specific tasks when the parties involved agree on the terms. Ethereum’s smart contracts are the most evolved in the market, so its contribution to DAOs is significant.
Due to their decentralized nature, DAOs can be implemented in any form of management that an entity or a group of individuals might benefit from. Voting, for example, is transparent and verifiable since all stakeholders can access the initial proposal submission and engage with the on-chain execution.
Ethereum is useful for data storage
Ethereum has the potential to become a significant decentralized storage space, where users or organizations run the network. This allows data to live within multiple locations or nodes through encryption, but only the owner of the data has the private encryption key, so no one else can access it.
Current solutions store information in massive server farms or physical spaces, which are high-risk. However, storing information within decentralized networks is more efficient, especially with Ethereum’s technology, which helps encrypt and send information between servers.
As a decentralized storage (dStorage) system, Ethereum still has a lot to work on, since it wasn’t designed for this specific purpose. Still, developers can approach this development based on factors like data retention enforcement, incentive structure, and consensus.
Ethereum can enhance decentralized exchanges
As a decentralized network, Ethereum has the potential to bring DEXs to the next level, regardless of their features. These peer-to-peer marketplaces facilitate transactions between market participants through liquidity pools for all types of DEXs:
- Automated Market Makers (AMM) in decentralized exchanges use more smart contracts to intermediate trading and solve liquidity issues;
- Order Book (on-chain and off-chain) is less technical and allows users to trade similar to a traditional system, so they have less liquidity;
- DEX Aggregators consist of platforms whose purpose includes comparing exchanges and finding the one users are looking for;
Decentralized exchanges are on the rise, with many being either an ERC-20 token (Uniswap) or simply built on top of the Ethereum blockchain (Curve Finance).
Ethereum can provide applications for various industries
The Ethereum blockchain and the dApp ecosystem can be significantly beneficial for the world’s most challenged institutions. For example, the digital ledger can help the health sector with a public data network in which doctors and patients can access data and records safely without compromising security.
Ethereum can also be efficient in the music industry, where creators could offer better pricing and distribution for fans through specific subscription plans. This could allow artists to receive the payments they deserve, so they won’t have to share revenue with intermediaries, but also support fair copyrights.
By far, Ethereum’s most advanced use cases are in the financial world, where it can not only provide fast transactions but also ensure decentralized networks, protect information, and make agreements faster through smart contracts.
What are the challenges that limit Ethereum at the moment?
Despite its massive potential, Ethereum faces several issues that will need a solution if it’s to become the next global tool. The most pressing matter is the lack of regulation due to the authorities’ skepticism. Since Ethereum is part of the new age of transactions and technology, it’s still not entirely understood, and the scarce talent that could manage it contributes to this reluctance.
At the same time, Ethereum is still considered highly complex from a technical point of view. Its programming language, Solidity, can be difficult to master, and understanding how mechanisms like smart contracts and dApps work still has a steep learning curve.
Moreover, the newness of this technology has led to several cybersecurity challenges, given smart contract vulnerabilities. Reentrancy attacks, timestamp dependence, and gas limit issues are still prominent within the network. We hope that within the next five to ten years, when the roadmap might finish its updates, these issues will also be solved.
Final take
Ethereum is one of the most advanced blockchain technologies on the market and has evolved considerably in recent years. It has the potential to become a multi-use-case asset in the future, enhancing online transactions and supporting DAOs, helping in a range of industries, and securing networks. Still, legal challenges and the lack of talented programmers and developers hinder faster progress, making it difficult for Ethereum to reach global adoption.
