The general-purpose blockchain Ethereum turned five on July 30. And while it is certainly doing far more than merely toddling about, there is every expectation that it will find its footing in a number of different sectors in the years ahead.
Alternately billed as “the world computer” and “the foundational platform for everything” when it was launched in 2015, Ethereum has been deemed capable of impacting such sectors as supply chains, ecommerce, communications, healthcare, real estate, social media and even elections.
But to date it has made its biggest impact on decentralized finance (DeFi), a financial system that operates without the need of a central authority, like a bank or governmental body. In other words, decentralized apps — i.e., Dapps — can be created on Ethereum (not to mention other blockchains), with the most common of those apps making it possible for users to lend or borrow cryptocurrencies such as Ether, Ethereum’s crypto.
DeFi, a $1 billion business in January 2020, had quadrupled in value by July. It offers financial access to the world’s 1.7 billion unbanked people, and is expected to disrupt traditional banking institutions. Alex Batlin, CEO of the crypto wallet Trustology, told Decrypt.com that he could, in fact, foresee DeFi becoming the world’s most trusted global liquidity pool within the next five years. And, he added:
“As DeFi goes global and becomes reliable, more liquidity will flow there, and attract more liquidity. All of this will be enabled by decentralization, because it is safer.”
Kosala Hemachandra, founder/CEO of MEW (MyEtherWallet), agreed, informing that same outlet that “DeFi will transition from being a trendy and high-risk way to maximize gains in crypto, to a daily necessity and reality for personal finance — less risky, more usable, more reliable, and more ubiquitous.”
The rollout of Ethereum 2.0, which began in November and will be done in stages, will hasten Ethereum’s rise in other realms. This new iteration is hailed for its change from Proof of Work (i.e., a system demanding a certain amount of work to ward off hackers and such) to Proof of Stake (a system where transactions can be performed according to the amount of cryptocurrency a user holds), and draws Ethereum closer to the point where it might become, as co-founder Vitalik Buterin once wrote, “a crypto network that intends to be as generalized as possible.”
That means more decentralization in more areas. Consider that in December 2018, the U.S. government passed legislation that would make online services more easily accessible. Consider the way smart contracts, an Ethereum staple, simplify supply chain management; the World Economic Forum estimates that it could result in $1 trillion in new trade over the next 10 years. Consider the platform’s potential impact on healthcare, as blockchains have been shown to minimize instances of patient misidentification and information blocking.
Other potential use cases are real estate, as smart contracts can make transactions easier to consummate. Distributed ledger technology (DLT) has also shown potential in elections, as exemplified in West Virginia’s 2016 primary.
In short, there is still vast potential for Ethereum. Having clambered to its feet at age 5, it is now getting steadier and stronger. No telling how far it might run in the years ahead.