If you are active on social media, listen to the latest news or chat with your colleagues, you might have already heard about cryptocurrency and how it is based on blockchain technology.
Blockchain technology which sounds like something from a futuristic sci-fi movie is very much real and is gaining massive attention from businesses around the world. And for the right reasons!
This technology shows massive potential in the financial industry for functions such as settlements, cross-border payments, organizing back-office processes, and so much more. But these changes haven’t yet disrupted the financial sector. The application is quite slow.
However, with Ethereum blockchain gaining speed and attention, these changes can be implemented more quickly and efficiently. This will certainly have long-term effects on how financial institutions work and carry out their crucial business functions.
Before we take a look at how Ethereum will bring massive and powerful change in the fintech business functions, let’s take a quick overview of the Ethereum blockchain.
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Ethereum Blockchain: A Quick Overview
So, the first question that many people ask is “Why was Ethereum Developed?”
Ethereum blockchain was initially developed to diversify the use of Bitcoin. However, it has evolved prominently for implementing ‘smart contracts’.
VitalikButerin first proposed Ethereum blockchain in 2013 which eventually went live in 2015 with its beta version. The native token of the Ethereum blockchain is Ether which has a market capitalization of $25 billion. This is just behind Bitcoin and hence it is the next most popular cryptocurrency in the market.
Ethereum can be used to trade anything without needing any third-party approval. Using smart contracts via Ethereum reduces the need for a legal system, judge, or court. Ethereum Virtual Machine (EVM) will not only execute smart contracts but can also be used to bet or execute wagers, coupon-paying bonds, employment contracts, purchase high-value items using Ethereum as escrow, and more.
The potential of EVM is certainly high and powerful. However, it is still in its beginning! Several things need to be developed to make it accessible to everyone. Currently, smart contracts are highly expensive but to make them affordable, massive technological development needs to be achieved in the Ethereum blockchain technology.
Ethereum Will Give Rise to Decentralized Autonomous Organizations (DAOs)
The execution of DAOs using smart contracts will become a real-time possibility using Ethereum blockchain technology. These decentralized organizations will have business functions similar to any other regular corporation, however, without much human intervention.
Most corporations are just a huge network of contracts and obligations. This complex network can be converted into DAOs using Ethereum.
Ethereum and Decentralized Applications (Dapps): Already a reality!
Ethereum and Dapps are already a reality! Although DAOs are still a thing of the future, Dapps have already come into existence. These are standalone applications such as payment gateways, gambling applications, P2P marketplaces, and more.
The implementation of the Ethereum blockchain will eventually extend to day-to-day applications such as chat, shopping, gaming, and banking.
Final Takeaway
Although Ethereum blockchain was developed to support and enhance the functions of bitcoin, it has found its niche in smart contracts. The blockchain shows immense potential to completely transform how financial institutions execute business functions.
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