Ethereum 101: Framework, use cases and application

Ethereum use cases

What are Ethereum’s key advantages over other blockchain frameworks?

• 1. Smart contracts

  A smart contract is a protocol designed to enable digital contracts without the need for third-party validation. These are basically self-executing contracts where the contents of the buyer-seller agreement are written directly into lines of code.
  Anonymous parties carry out the verification process for smart contracts in the network eliminating the need for a central authority. This is why smart contract execution on Ethereum is decentralized. Not only is the transfer of asset and currency completely trustworthy and secure, the identities of the entities are secure on the network. After the transaction is complete, the accounts are updated accordingly and it generates trust between the parties.

• 2. Decentralized finance

  Ethereum became widely popular for its Defi feature. Decentralised finance or Defi doesn’t need any financial institution or bank to execute payments. The DeFi ecosystem has built an expansive network of integrated protocols and financial instruments, with over $13 billion worth of value locked in Ethereum smart contracts. Defi has emerged as the most leveraged sector in the blockchain space with an endless number of use cases for individuals, developers and organizations. Defi uses key principles of Ethereum to improve financial security and transparency, support an integrated and standardized ecosystem and unlock liquidity.
  These are:
  

  1. Programmability
  2. Immutability
  3. Interoperability
  4. Transparency
  5. Permissionless-ness
  6. Self custody

• 3. Non fungible tokens

  Non fungible tokens or NFTs have taken the digital creation world by storm and with good reason. NFTs are essentially tokens that are used to show ownership of unique possessions. They help us tokenize things and state ownership of various things such as art, collectibles, and even real estate. An NFT can only have one official owner at a time and this is secured by the Ethereum blockchain. Nobody can alter the record of ownership or copy/paste a new NFT into existence.
  Non fungible is an economic term that means things like furniture, a song file or a laptop. These things are unique and can’t be interchanged with other items because of their uniqueness. Fungible items are those that can be exchanged because their value defines them rather than their unique properties. For instance, ETH or dollars are fungible because 1 ETH is exchangeable for another ETH and so on.
  Ethereum offers a digital certificate for these assets establishing unique ownership that cannot be transferred. Copies of these digital assets are available but NFTs are traceable on blockchains to provide the owner with proof of original ownership.

• 4. Decentralized apps or dapps

  Dapps short for decentralized applications are powered and developed using the Ethereum platform. They use smart contracts for their logic and are deployed on the Ethereum network, using the platform’s blockchain for data storage.
  Dapps are as varied as traditional mobile and web applications. They offer social networks, gaming, entertainment, productivity and a variety of functions. Many dapps are designed specifically to help customers access defi services. The latter use case is so popular that Ethereum categorizes dapps into financial, semi-financial and other categories.
  Dapps have their backend code running on a decentralized network and not a central server. Dapps use smart contracts for app logic and Ethereum blockchain for data storage. Ethereum has been one of the most widely used hosts for dapps though it is not the only one. Dapp development offers several benefits including zero downtime, privacy, resistance to censorship, data integrity and trustless computation.

Ethereum application and use cases

In addition to defi, dapps, NFTs, and smart contracts Ethereum has many other applications.

1. Payment gateways
   One of the most exciting uses of Ethereum is for payments and remittances as it allows for sending money globally without transaction fees. Payment gateways integrated with Ethereum or crypto let users store their funds in an account that converts the tokens into flat currency for the transaction.
2. ICO platforms
   An important application for Ethereum is crowdfunding through initial coin offerings( ICOs). Many companies have already launched ICO platforms that help users create a new digital currency. This leads to an ecosystem that allows consumers, investors, and developers more freedom than before.
3. Tokenizing assets
   The security token market is a multi-trillion dollar business and Ethereum could well be the preferred platforms empowering this trend. Security tokens are a block-chain based representation of real-world assets such as stocks, precious metals, real estate etc. Issuers can transact and transfer these assets more easily using tokenization. For instance, the blockchain startup PolyMath is building one of the first compliant platforms to tokenize real world assets.
4. Health applications
   Etheruem is set to transform the healthcare space as hospitals globally will be able to store, access and secure their patient records, and share them securely. This is an important development for future vital outbreaks, both in prevention and controlling with the development of new vaccines.
5. Digital Identity Management
   Identity theft is a serious problem in the age of information. Ethereum apps offer a unique solution to prevent identity theft and fraud. The use case is not just limited to individuals but also to companies and IoT devices. Ethereum allows users to create and maintain their digital identities through components such as decentralized identifiers, identity management and embedded encryption.