Internet was created to connect computer systems worldwide and it has revolutionized the communication system. It has really opened a plethora of interactional opportunities for individuals and their computational devices irrespective of the geographical locations. While providing a mammoth broadcasting capability, it has also delivered a medium of collaboration to us. But does the internet need improvement in transferring monetary value? The corporate internet giants are obviously making a lot of money but how easy it is to transfer money online? The checkout process while transacting is often difficult and you need to enter your card details. There is no assurance that your local card will be accepted worldwide. Failed transactions happen frequently and your confidential financial details can be leaked anytime to cause nightmares for you.
Let’s talk about more complex transactions like micro-payments, monetising your social media posts, peer-to-peer transactions without any intermediary. Internet is really horrible in this. Think about transferring ownership of your artwork or your real estate online! You may be able to do it after a lot of hassles but paper works must be done to comply with the law of the land and you may find the physical process more convenient rather than opting for the online process.
Along with time, the internet has also evolved. The success of Web 2 came through user-generated content and participatory culture. The wave of Web 2 has not died down but we have started to see a paradigm shift in internet applications. Web 3 movement seems to be more disruptive as it is leading us towards trustless, censorship-resistant and open networks. It is possible to incentivise the long trail of stakeholders associated with work by using a decentralized LEDGER that offers transparency. Yes, we are talking about blockchain technology now. Bitcoin was the first peer-to-peer permissionless digital money but the transfer of value conducted on-chain through smart contracts was not possible before Ethereum. It really came as a new concept but blasted the ‘digital economy'.
Vitalik Buterin published the whitepaper of Ethereum in 2013 with the primary motto of building applications. Ethereum blockchain was launched in 2015 after successful crowdfunding and it established itself as the second-largest cryptocurrency as per market capitalization very fast. The Initial Coin Offering (ICO) boom happened in 2017 and Ethereum became the preferred method for fundraising. The ICO boom did not last very long due to various scams and failures of the startups. Ethereum developers continued to innovate with various financial applications. Decentralized finance or DeFi originated on the Ethereum blockchain. Various DeFi applications locked billions of dollars and surprised the world with astounding growth. The growth of prediction markets like Augur, Omen, Poly Market etc. also took the media by storm. All traditional financial concepts are being replicated on the Ethereum blockchain in a decentralized way nowadays.
Currently, we can see NFT mania! NFTs are getting amazing investor attention due to their verifiable authenticity and ownership on the blockchain. The collectors are liking the concept of verifiable scarcity and the NFT market is growing like a rocket. Whatever you do on the Ethereum blockchain, you spend ether (ETH) that is the native cryptocurrency of the blockchain, so ETH becomes your money. Stocks, real estate, precious metals, fiat currencies and anything under the sun are being tokenised on the Ethereum blockchain. Ethereum, often dubbed as ‘the world computer’, has always remained imaginative. Now it is proving to be a battle-tested medium to settle values with the support of its broad Layer 2 ecosystem and EVM (Ethereum Virtual Machine) compatible chains. Everything is built around Ethereum.
“It's clear to me now that Ethereum is the new currency of the Internet. It's way ahead of where Paypal was in its day, and it's much more exciting to its customers than Paypal ever was.” – Gil Penchina
The network effect is a phenomenon where the increased number of participants improve the value of goods or services. The internet can be an ideal example of the network effect. Initially, it was used by few users but slowly it expanded its reach as more users gained access to it. Ethereum’s network effect flourished in a similar fashion. The development, improvement and continuous new uses cases of Ethereum drew more users to connect, transact and settle values on-chain. The game has just begun! Ethereum has solved the issue of the transnationality of electronic cash. The ‘global settlement layer’ is already settling financial value across national borders freely. The significance is disruptive internationally. The price volatility of ether and high gas fees remain as challenges but the store of value should become stable in the long run and positive network externalities will help that. The economy of the internet is finally showing signals to be de-regulated. The road will be full of thorns and spikes but we need to overcome it to obtain a transparent, censorship-resistant virtual commerce for the benefit of mankind. Embrace Ethereum and experience the internet of money.
Note: This post was first published here for Cryptowriter. The cover Photo source is here.
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