When it comes to cryptocurrency, Ethereum is not the other white meat. It’s younger and less expensive than Bitcoin, but it also has great capabilities Bitcoin does not. Chief among these is its incredible versatility that lead to innumerable ways to apply its underlying technology to different types of projects.
While Ethereum probably won’t be on par with Bitcoin valuation-wise, its ability to support these projects sets it apart. Check out three crypto projects below that Ethereum has made possible and that cryptocurrency experts say you should learn if you’re thinking about getting a job in the crypto space as a software developer.
What’s the Big Difference?
Most people think “virtual currency” when discussing what blockchain-related tech is all about. Yet this isn’t the only thing Ethereum can do. Its capabilities go deeper than creating digital coins that can be used as currency. Yes, Ethereum’s blockchain creates and manages the Ether cryptocurrency but the same tech is used to accomplish highly-innovative actions.
First, Ethereum supports the creation of cryptographic codes that, when programmed into self-contained rule sets, can execute pre-coded commands depending on certain conditions. These “smart” contracts are written to a blockchain and are used exclusively to handle specific blockchain transactions. Every blockchain has the ability to do this to a limited degree, but Ethereum is different — it supports highly specific and varied uses of smart contracts — more than other blockchain.
Because Ethereum is so good at supporting smart contracts, it’s possible to create several of them that work together. Through these interrelated smart contracts, developers can create software apps that run exclusively on Ethereum’s blockchain. These decentralized apps — dapps for short — are robust enough to complete highly complex tasks. Whether its resource planning, game design, or even asset management, dapps can all be designed to handle these tasks.
Standardized ERC-20 Tokens
Ethereum dapps are powered by Ether coins, as they’re native Ethereum-based software. But for developers who want to create their own cryptocurrency and don’t want to abandon the Ethereum ecosystem they can use a standardized Ethereum ruleset referred to as ERC-20. Guidelines for the ruleset allow developers to create a unique custom crypto token built to pre-ordained specifications that make it compatible with Ethereum. Many developers use ERC-20 tokens for capitalization by selling them as part of an initial coin offering crowdsale. After the ICO, investors can then hold their tokens for an ROI or use them in the dapp once it’s finished being developed.
Ethereum-Based Cryptocurrency Projects
It’s obvious how versatile Ethereum is as a blockchain, based on its capabilities. A quick glance at the news about ethereum shows that there are countless dapps being released in a constant flow, with some of them running on some very complex smart contracts. Many of these dapps have their own ERC-20 token associated with them. Because there are simply too many to list all at once, here are three of the most noteworthy of these Ethereum-based cryptocurrency products, chosen either because of their historical significance or their contemporary applications.
The DAO started life as the first major decentralized autonomous business organization to be built on a blockchain. A major breakthrough in Ethereum dapp design, the DAO, sadly, has also become one of the biggest crypto cautionary tales ever. Originally conceived as a venture capital fund that could run on “automatic” without human input thanks to its complex smart contracts, the DAO took the money investors paid into it and used it to make investments on their behalf. IN return, the DAO issued those investors DAO tokens to signify their investment.
While the automated trading and investing activity was its biggest strength, its automation led to the DAO’s downfall. Some of the smart contracts programmed into the Ethereum blockchain were found to have undetected vulnerabilities that led to hackers stealing $50 million worth of investor money. This error erased confidence in the DAO, leading to its ultimate demise. However, the upside to the implosion of the DAO does have a silver lining, as Ethereum developers have taken these hard-learned lessons to heart, becoming much more cognizant of the limitations of smart contracts. Still, due to the spectacularly well-publicized failure of the DAO, there are few investors that are willing to surrender control to a similar investment project just yet.
What do you do when you want to revolutionize access to supercomputer-level computing power? You design a dapp to do it across an entire decentralized blockchain ledger. That’s what Golem seeks to achieve; it uses a democratizing approach by offering leased computing power to anyone who wants it. If you’re a 3D animator that needs to render some special effects for a film, a geneticist that’s hoping to run simulations on new therapies, or a software engineer that needs to test machine learning algorithms for an in-development AI project, Golem can be used to achieve your goals.
Using Golem is easy. As long as you have a token for the app — created on the Ethereum blockchain — you can purchase the amount of computing power you need. Conversely, you can also be rewarded these tokens by contributing your personal computer’s power to the project. Golem’s use as a utility keeps token cost down as well, providing access for everyone interested.
In ancient Greek, “gnosis” means “knowledge”, and that’s what this dapp provides. This Ethereum-backed project is a decentralized prediction market processor; in other words, you can use it to make predictions on who you think’s going to be the next Rock and Roll Hall of Fame inductees — or the name of the horse that wins the next Kentucky. The project focuses on being automated, transparent, and using real-time data for its predictions.
This doesn’t mean Gnosis is just a piece of betting software. Its transparency and automated nature takes the human element out of predictions by reducing the possibility of tampering and other illegal activities. In other words, there’s no worry about human operators “cooking the books” by altering wager payouts or tampering with betting odds, as the system handles these things automatically on its own. Additionally, any attempts to alter the details of each transaction would be reflected in the blockchain itself, which is visible to the public. This makes tampering with Gnosis — and getting away with it successfully — a real challenge.
The Tip of the Iceberg
These three cryptocurrency projects are just the beginning when it comes to what the Ethereum blockchain can do. Blockchain developers and smart contract programmers can and will achieve more interesting things in the future, especially since Ethereum is so adaptable and flexible.
For every Ethereum headline in the news, there will likely be three about Bitcoin. But just because it doesn’t get as much press doesn’t mean it’s not as important. Ethereum-backed crypto projects are going to get increasingly interesting from here on out.