If Bitcoin (BTC) is the king of cryptocurrency, the prince would certainly be Ethereum (ETH). Ethereum has the second highest trading volume in the world and its tokens possess clear utility in which Initial Coin Offering (ICO) fundraisers are definitely aware of.
Ethereum’s main utility is to create Smart Contracts. Smart contracts are programmable contracts, which its name suggests are ‘smart’ as it can be customised according to each transaction; not limited to monetary transactions. The smart contract verifies its programmed terms and conditions being fulfilled, and afterwards, is able to perform a further action such as releasing of funds to either or both parties. Simply put, the smart contract’s codes enable users to facilitate a transaction or contract without having any intermediaries.
Ethereum is another blockchain network, which means that it is also decentralised, just like Bitcoin. For example in our day-to-day usage, collaborative platforms are almost similar to blockchain networks. Online document providers such as Google docs enables multiple users to access one single document which allows for collaboration. If anyone on the document makes any changes, everyone who has access to it is able to see the changes and the history of revisions. Similarly on blockchain networks, everyone is able to access it and its history of data is almost impossible to be manipulated. Sitting on the blockchain are the smart contracts, which share the same qualities. This disrupts traditional businesses which have been relying on central servers with people as supervisors, as central servers are susceptible to hacks and data manipulation while decentralised networks are not.
An example: Rights transfers
An example of using Smart Contracts is the transfer of rights such as land transfers. In a traditional environment, there is a central agency which acts as the manager by accepting documents to verify, check and deliver. However with the usage of smart contracts, it removes the need of a middleman to facilitate the transfer.
Ethereum is an open source code which allows anyone to access and utilise it to create their very own Smart Contracts. Especially with its capabilities of being programmed to facilitate almost any transactions or transfers, Ethereum is a popular choice for cryptocurrency fundraisers to generate new cryptocurrencies for their ICOs. This is also how Ethereum’s growth came about, which filled the gap at that point as Bitcoin does not have programmable contracts.
The man behind Ethereum is none other than Vitalik Buterin, a Russian programmer. He is considered to be one of the most important people in the cryptocurrency world as he has contributed greatly with the birth of Ethereum.
While most ICOs are sitting on the Ethereum network, with the rapid growth of developers and ideas within the cryptocurrency landscape, it is now challenged by other networks with similar capabilities of Ethereum’s smart contracts, such as NEO from China and Stellar from South Korea.