What Ethereum’s value is based on?

Understanding the fundamentals that create the value of Ethereum 

Let’s start by looking at what Ethereum is, demystifying the blockchain technology behind it. Then we’ll travel back in time to discover Ethereum’s captivating history.

Explanation of what Ethereum is 

Ethereum, often referred to as ETH, is more than just a cryptocurrency. Rather, it is a decentralised platform based on blockchain technology. Blockchain, more generally, operates through a global network of computer nodes that execute smart contracts.

Blockchain technology is the cornerstone of Ethereum. It is a secure, immutable public register that records all transactions and smart contracts created on the platform. Each block of data is linked to the previous one, forming a blockchain.

Ether (ETH), Ethereum’s native crypto-assetDigital asset based on cryptography principles. Peer to peer traded, on a decentralized network, thanks to Distributed Ledger Technologies such as blockchain. The user is integrated into storage and transaction Lire la suite, is used to pay transaction feesFees related to operations; they sometimes are distributed to miners. Lire la suite on the network. It also serves as a reward for miners who secure transactions. In addition, Ether is often used as a form of stored value, similar to Bitcoin.

What makes Ethereum revolutionary are its smart contracts. These are autonomous programs that run automatically when certain conditions are met. They make it possible to create decentralised applications (DApps) and automate complex transactions without the need for intermediaries.

Ethereum has paved the way for numerous innovations in the field of crypto-assets and blockchain technology. It has enabled the creation of DeFi« Decentralized Finance », peer to peer blockchain based financial services such as staking. Lire la suite (Decentralised Finance) projects and non-fungible tokens (NFTA Non-fungible Token is a unique token issued on a blockchain through a smart contract. It is different from acrypto asset because it can’t be reproduced, however, it is still Lire la suite).

By understanding these fundamentals, you’ll be better equipped to grasp the scale of Ethereum’s impact in the modern digital world. 

Background to Ethereum 

The story of Ethereum is a fascinating saga. It all began in 2013, when Vitalik Buterin, a Canadian developer of Russian origin, published a white paperDefines technological basis of a project, explains its consensus mechanism (algorithm, rewards) and eventually presents its business model or business plan if the crypto asset is a token. It is Lire la suite entitled “Ethereum: an introduction to decentralised programming”. 

This visionary document laid the foundations for the Ethereum project by setting out a revolutionary idea: using blockchain technology for much more than just transactions. However, it was not until 2014 that Ethereum really took shape. An Initial CoinCrypto asset having its own blockchain, used as accounting unit, trade intermediary and value storage. Lire la suite Offering (ICOAn Initial coin offering is a crypto fundraise in which a crypto asset is created and offered to public investors.The investor therefore takes the risk of selling reference digital assets Lire la suite) campaign was launched to raise funds and make Ethereum’s vision a reality. The campaign was a great success, raising more than $18 million in bitcoin (BTC) in just a few weeks.

In July 2015, the Ethereum network was officially launched, marking the start of a new era in blockchain technology. Ethereum introduces the concept of smart contracts, programs that automate a wide range of processes and applications.

Over the years, Ethereum has grown exponentially, enabling the emergence of a community of developers, businesses and passionate users. In 2020, Ethereum migrated to a new version, Ethereum 2.0. This version introduces a Proof of StakeBlockchain consensus mechanism attributing the consensus determination by adding blocks to the blockchain to master nodes, having a certain number of coins of this blockchain. This amount is always indicated Lire la suite (PoS) consensusTruth admitted by all system participants. This doesn’t imply that it is the absolute truth or that it’sindisputable, it is the truth participants agree on. In crypto, algorithms beginning with Lire la suite algorithm to improve the network’s efficiency and reduce its carbon footprint.

The story of Ethereum is still being written, but it already represents a key chapter in the history of technological and financial innovation. 

Decentralisation and security, the source of Ethereum’s value 

Now that we’ve taken stock of what Ethereum is, let’s look together at the importance of decentralisation and security in Ethereum’s value. How these elements define the fundamental role of Ethereum. What is the impact of smart contracts and decentralised applications (DApps) in eliminating intermediaries.

The role of decentralisation in the value of Ethereum 

Decentralisation is central to the value of Ethereum. Unlike traditional centralised systems, Ethereum, as we have seen, is based on a global network of decentralised computer nodes. 

This distinctive feature means that the platform is not controlled by a single entity. Blockchain technology and the emergence of smart contracts significantly reduce the need for intermediaries. Redefining the way transactions and agreements are made.

What’s more, decentralisation guarantees resistance to outside interference: no one can censor transactions or alter the rules of the network without the consensus of the community. The total transparency of transactions on the blockchain strengthens user confidence, while the worldwide distribution of nodes makes Ethereum resilient to breakdowns and attacks. 

Ultimately, decentralisation is a cornerstone of Ethereum’s value, offering a new era of trust and opportunity where individuals have greater control over their financial transactions and arrangements.

Ethereum’s security features 

Ethereum’s security is profoundly influenced by the shift from Proof of WorkOldest consensus algorithm, on which Bitcoin is based. On public blockchains, the consensus algorithm choses the block that is added to the blockchain at a given time and the “truth” Lire la suite (PoW) to Proof of Stake (PoS). In the original PoW model, miners solve complex mathematical problems to validate transactions and secure the network, although this method consumes a lot of energy.

Ethereum 2.0, on the other hand, introduced PoS, with validators now securing the network by locking up a guaranteed quantity of ETH. These validators are chosen to create new blocks based on their commitment to the network, measured by the amount of ETH they have at stake. This transition to PoS aims to reduce energy consumption while strengthening Ethereum’s security and decentralisation. 

As far as Ethereum’s overall security is concerned, despite a few minor incidents in the past, the blockchain maintains a solid reputation. The size of its developer community and the geographical spread of its nodes have contributed to its resilience to attacks. In addition, the transition to PoS should further reduce the vulnerabilities associated with PoW. However, security remains an evolving challenge, requiring continued vigilance from the Ethereum community to maintain its positive security record.

Uses and applications

As you’ve seen, Ethereum is more than just a crypto-asset; rather, it is a versatile platform that has unlocked a multitude of possibilities beyond the simple exchangeExchange platform for crypto assets (Binance, Kraken…) Lire la suite of value. Let’s discover the many facets of Ethereum’s usefulness and the various use cases that arise from it.

Ethereum as an innovation platform

Ethereum is a veritable hub of innovation in the world of blockchain. In addition to its blockchain function, it offers fertile ground for the creation of decentralised applications (DApps) and smart contracts. 

Thanks to its flexibility and programmability, Ethereum has enabled the creation of a multitude of innovative projects. Sectors as diverse as finance, supply chain, healthcare and art have seen the emergence of innovative solutions based on Ethereum technology.

The interoperability and open standards of the Ethereum blockchain have also fostered the growth of a dynamic ecosystem of non-fungible tokens (NFTs). By exploring the vast possibilities Ethereum offers for innovation, it is clear that this platform has redefined the way we think about and use blockchain technology, opening up new opportunities for the digital future.

Intelligent contracts and their importance 

Smart contracts are the cornerstone of the Ethereum ecosystem, and their relevance extends far beyond simply executing transactions. They have revolutionised the way transactions and agreements are managed, removing the need for traditional intermediaries such as banks or lawyers.

These advances translate into considerable cost savings and faster processes. More importantly, smart contracts open the way to a host of practical applications in a variety of fields.

In the financial sector, for example, they enable automated loans. In the supply chain, they improve product traceability, guaranteeing quality and transparency. In the healthcare sector, they secure the sharing of medical data while preserving confidentiality.

Smart contracts are playing a central role in the rise of Decentralised Finance (DeFi) on Ethereum. Autonomous protocols now exist that enable loans, exchanges and financial returns without the need for a trusted third party.

By understanding the fundamental importance of smart contracts in these concrete applications and DeFi, it is clear that these revolutionary tools are paving the way for a new digital era.

Ethereum’s market position 

Ethereum has always occupied a prominent place in this dynamic ecosystem. It remains essential to understand how it is positioned in terms of capitalisation and dominance relative to other major digital assets. Let’s also try to draw a comparison with other crypto-assets/blockchains to get an overview of Ethereum’s place.

Capitalisation and dominance of Ethereum

Ethereum is the undisputed leader in the crypto-asset market, both in terms of capitalisation and dominance. Its capitalisation, which represents the total value of all ETH in circulation, regularly places it among the best-valued digital assets in the world. At 20 September 2023, it will be worth $196.6 billion.

Moreover, its dominance of 18.62% on 20 September 2023 is a key indicator of its position in the overall market. This position reflects the confidence that the community has in Ethereum as a pillar of blockchain and decentralised technology. It is a measure of Ethereum’s influence on the market. By understanding Ethereum’s capitalisation and dominance, we can better assess its impact and influence on the entire crypto-asset ecosystem.

As we can see from this chart, since 2020, the price of the dominant Ethereum has grown steadily, rising from 7% to 18.53% in September 2023. Thanks to its strength of proposition, the Ethereum blockchain continues to maintain its position as “leader” in the crypto-asset market.

The price of Ethereum soared from around €310 in September 2020 to more than €4,000 in November 2021. Although it then fell, it has made up for it. In 2024, ETH gained 65% since the start of the year to exceed €3,500 in March.

Comparison with other crypto-assets and blockchain 

To better appreciate its value, it is essential to compare it to other renowned digital assets and blockchains. Take Bitcoin, often referred to as ‘the king of crypto-assets’

While Ethereum is versatile, Bitcoin focuses primarily on storing value. Other blockchains, such as Binance Smart Chain and Solana, offer alternatives with advantages such as faster transactions and lower costs, but they sacrifice some of their decentralisation. Cardano stands out for its focus on academic research and security. Each of these blockchains has its strengths and weaknesses, and competition is fierce to win the favour of developers and users.

What is certain is that Ethereum remains in the vanguard as a key blockchain that has contributed enormously to the development of the crypto ecosystem.

How can I buy Ethereum?

If you want to buy Ethereum, there are several ways to do so. Firstly, you can carry out a transaction with someone you know who wants to sell their Ethereum. In this case, all you have to do is create a walletPrice variation of an asset on a given period. Lire la suite, send them euros/dollars and proceed with the transaction.

This first method is not the easiest, as you need to make direct contact with someone you trust who wants to sell Ethereum. To deal with this problem, centralised exchange platforms have been developed. By passing through a platform, you are automatically put in touch with a person wishing to sell Ethereum, enabling you to acquire some.

This is what Delubac offers: with just a few clicks, you can decide to buy or sell Ethereum in a simple, secure and regulated environment.

Key facts about the value of Ethereum 

Summing up what we have explored throughout this article, it is clear that Ethereum’s value rests on solid foundations and distinctive features.

Ethereum is not just a crypto-asset, and that’s where its value materialises. The technologies it carries, smart contracts and the transition to Proof of Stake (PoS) are all shaping its future. Decentralisation is at the heart of its value, eliminating intermediaries and building trust.

Concrete applications, from finance to healthcare, as well as the rise of Decentralised Finance (DeFi), bear witness to its influence in the real world. Compared with other blockchains, Ethereum retains its leading position thanks to its versatility.

In short, Ethereum’s value lies in innovation, trust, and its ability to adapt to the changing needs of our ever-evolving digital world. As the crypto-asset ecosystem evolves, Ethereum continues to demonstrate its relevance and enduring value in this technological revolution.