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Why Is ETH so Important in Crypto?

Paul L.
GUIDES

Many cryptocurrencies used in the decentralized financial industry rely on Ethereum as their backbone technology. In addition, Ethereum’s price is no longer strictly following Bitcoin’s but rather is being propelled by its own triggers.

Ethereum has been around for 8 years now. However, a lot has transpired in the little period since its debut on July 30, 2015. Ethereum has become one of the most popular blockchain platforms, and its native token, a digital currency called Ethereum, has risen to become the second biggest cryptocurrency by market value and trading volume.

ETH and its Smart Contracts

Ethereum was created as a network for the execution of smart contracts and decentralized applications using its native currency, ether. Decentralized apps (DApps) like decentralized financial services (DeFi) or non-fungible tokens, or NFTs for short, began to develop and retain value thanks to the Ethereum blockchain’s ability to execute smart contracts that fuel them.

Ethereum’s price should surge due to the introduction of DeFi. Many cryptocurrencies used in the field of decentralized financial services are based on Ethereum; hence the term “DeFi” has become synonymous with Ethereum. Over 200k ERC tokens are hosted on Ethereum, including some of the top 100 biggest cryptocurrencies. DeFi is a platform that facilitates the exchange of assets, as well as the borrowing and lending of money, between individuals outside of the traditional banking system.

Relationship ETH – BTC

Both the whole cryptocurrency market and ether are heavily influenced by the price of bitcoin. When the value of Bitcoin goes up or down, so does the value of ether. Since most DeFi projects are constructed on the Ethereum blockchain, their prices skyrocketed during the dramatic DeFi bubble that swept the market in the summer of 2020. In the wake of Bitcoin’s late-2020 price surge, investors flipped their holdings from BTC to ETH, seeing the latter as a useful complement to Bitcoin as the former had become too “expensive.”

Ether’s price is no longer closely tracking Bitcoin’s, as it is beginning to be influenced by its own factors.

Is There a Difference Between ETH and Ethereum?

Ether may be used as a medium of exchange, an investment, or a store of value in the digital currency market. Ether (ETH) is a cryptocurrency that is stored and traded on the blockchain platform Ethereum. In addition to ETH transactions, this network facilitates a wide range of additional uses, as was previously described. The Ethereum network processes and stores the transaction data.

Data storage and distributed applications are two more uses for the Ethereum network. Hosting apps on the Ethereum blockchain is an alternative to using a server owned and controlled by a third party, like Google or Amazon, which would give that firm complete access to all of the data. Since there is no overarching administrator, users are free to share and utilize their data as they see fit inside the app.

Methods to Acquire Ether

  • Choose a crypto exchange or trading platform where you may buy and sell various cryptocurrencies. This is the simplest option if you just care about buying the most popular currencies, such as Bitcoin and Ether. Expect to pay a charge for processing or exchanging practically wherever you go.
  • Deposit currency: To buy Ether, you may connect a debit card or bank account to your trading platform or deposit fiat currency like dollars.
  • When you fund your account, you may buy Ether at the market price and invest in other assets. Once the coins have been deposited into your account, you have the option of keeping them, selling them, or exchanging them for other cryptocurrencies. It’s important to remember that selling or trading cryptocurrency may subject you to taxation.
  • Even while the default digital wallet provided by your trading platform is a convenient place to keep your Ether, doing so might be risky. Your coins are at risk if the exchange is hacked. If you don’t intend to sell or trade your coins anytime soon, you may always move them to a different virtual wallet or an offline wallet that isn’t linked to the internet.

Conclusion

In a nutshell, Ethereum (and ETH) has completely shaken up the cryptocurrency industry with its innovative smart contract framework and its decentralized application platform. Its development and popularity have been spurred, in large part, by its participation in DeFi as well as the huge range of DApps that are hosted on its platform.

The cryptocurrency ecosystem is constantly expanding, and Ethereum has emerged as a crucial support structure for the development of decentralized financial systems. In addition, the anonymity of transactions and the complete control that users have over their data make Ethereum an excellent and flexible option for the development of digital financial systems.

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Paul L.
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