what is ethereum?

Okay, before we get into this guide, you need to do one thing:

Stop thinking of Ethereum as a cryptocurrency.

Honestly! Although Ethereum does use a form of digital currency, it’s much bigger than money.

Ethereum doesn’t aim to be a global cash system like bitcoin. Ethereum is more like… the internet.

It’s often referred to as the “world computer,” but in simple terms, Ethereum is a platform for anyone to build something with blockchain technology.

Ethereum is a playground. It’s like lego. Or Minecraft.

In this guide, we’ll answer the burning questions: What is ethereum? How does it work? Who created it, and where can you buy ethereum? We’ll try to answer them all in plain language. However, you may want to read our explainer on Bitcoin first to get your head around the basics of blockchain.

CONTENTS

PART 1: What is Ethereum? (A Simple Guide for Beginners)
PART 2: What Is Ether, the Currency?
PART 3: Who Founded Ethereum? a Brief History
PART 5: How to Buy and Store Ethereum
PART 6: What’s Next and Who Are Ethereum’s Competitors?

PART 1: What Is Ethereum? (A Simple Guide for Beginners)

Ethereum infographic - ethereum explained

Infographic courtesy of @angelomilan

Ethereum Basics

Ethereum is a gateway for building just about anything on the blockchain – apps, games, contracts, even new cryptocurrencies.

But why would someone create an app on Ethereum rather than, say, the Apple app store or a normal website?

To understand why, let’s take a look at the Apple App Store and its problems.

Firstly, Apple is acting a gatekeeper. Every app must be vetted and approved by Apple. In fact, Apple rejects tons of apps or forces them to change how they operate.

Secondly, all the apps are hosted on Apple’s servers and accessible only to those with an Apple ID

This is the definition of centralization. One company controls many thousands of apps.

Then there are the apps themselves. A banking app, for example, saves your personal details, account numbers, and balance on its servers. Another example of centralization.

Ethereum infographic centralization explained

What’s Wrong with Centralization?

First, there’s the philosophical argument. Should one company, like Apple, really be the gatekeeper to the world’s apps?

Second, there’s the practical argument. If all the apps are stored in the same place (Apple’s servers), it’s much easier to hack. There’s one point of failure.

The same goes for the apps themselves. If all your private information and data is stored on the app’s servers, it’s more vulnerable to thieves.

Even websites are centralized. They’re built on cloud servers owned by hosting companies. One gatekeeper. One point of failure.

But what if websites weren’t hosted on one central server? What if apps didn’t have to be approved by Apple and stored on their cloud?

Enter Ethereum…

How Does Ethereum Work?

Ethereum is like the app store, except it isn’t owned or controlled by any one person or company.

Everything built on Ethereum is supported and verified by thousands of computers, all at once, all over the world. It uses blockchain technology to make sure there is no central authority.

Ethereum infographic how ethereum works

It takes what Bitcoin did for money and applies it to any industry on the planet.

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What is Ethereum

How Is Ethereum Different to Bitcoin?

Let’s back up and talk about Bitcoin for a moment. Bitcoin uses the blockchain to record financial transactions with complete transparency and security.

In other words, bitcoin is all about money.

But blockchain doesn’t only have to track money. Blockchain can record just about anything: electoral votes, goods, stocks, oil, contracts, data, home ownership, cartoon cats! (yes, really.)

Ethereum takes Bitcoin’s underlying technology and expands it for everything. More importantly, it allows creative developers to build things on it.

vitalik buterin ethereum circle“Bitcoin is great as a form of digital money, but its scripting language is too weak for any kind of serious advanced applications to be built on top.” – Vitalik Buterin, Ethereum founder.

 

Having said that, Ethereum and Bitcoin do share the same core values that make it so strong:

No censorship – Anyone can build anything they want, without a large company or government limiting their vision. Like Bitcoin, there’s no middleman.

Secured with cryptography – Like everything on the blockchain, building on Ethereum is secure. Transactions are encrypted and there is no single point of failure, so it’s very difficult to hack.

Immutable – Transactions on the blockchain cannot be reversed or altered.

Transparent – All transactions are preserved in the blockchain forever.

Still confused? Watch Ethereum’s founder Vitalik Buterin explain the whole concept:

Okay, so we know that Ethereum is a gateway to building on the blockchain. But what exactly can you do with it?

Ethereum Dapps (Decentralized Applications)

Most developers use Ethereum to build Dapps (decentralized applications). Dapps are just like an app on your phone, or a website, but hosted on the blockchain.

A Dapp is essentially any blockchain project that does something useful.

Bitcoin could be considered a Dapp. It’s a Dapp for transferring money without a bank.

Many thousands of others exist. For example, you might have heard of Cryptokitties. It’s a Dapp for buying and trading collectible cartoon cats. It’s like Pokemon cards but on the blockchain. It might sound ridiculous, but it’s actually quite revolutionary. Every collectible crypto kitty is 100% unique and cannot be duplicated because it’s on the blockchain. The rarity lead one buyer to pay over $100,000 for one crypto kitty.

cartoon cryptokitties collectibles on ethereum

More practical Dapps include Ethlance, a completely transparent freelance jobs portal. There are no fees and every contract between freelancer and client is executed on the blockchain. No more chasing payments for freelancers.

Read more: 10 Most Popular Dapps on Ethereum Right Now

Ethereum: A Launchpad for New Cryptocurrencies

Many of the Dapps built on Ethereum have also launched their own cryptocurrencies.

In fact, some of the biggest cryptocurrencies on the planet started on Ethereum.

EOS, TRON, Vechain, and ICON all started life as projects on the Ethereum network. They have since branched off and created their own blockchain (or mainnet).

A further handful of top 20 coins are still ‘hosted’ on Ethereum, including OmiseGo0x and Binance Coin.

Not only can you use Ethereum to build a new project, you can use it to create new cryptocurrencies.

Ethereum Smart Contracts

Ethereum was also created to execute smart contracts.

The easiest way to understand smart contracts is the much-used vending machine analogy.

A vending machine is a simple contract. It will automatically release a can of coke when the correct amount of money is inserted.

Smart contracts are the same. The contract will automatically execute only when certain conditions are met.

In a more practical example, let’s say you’re buying a house. Normally, a lawyer is responsible for executing the contract. They check whether the money has been transferred and whether the seller has met all the criteria.

On the Ethereum network, there is no human making that final call.

The conditions of sale are written into the smart contract in advance. When those conditions are met (such as money transfer and land survey completion), the smart contract will automatically execute.

The transfer is recorded in the blockchain forever. It is irreversible and completely transparent.

Read more: What are Smart Contracts? (A Simple, Easy-to-Understand Guide)

What’s the Point of Smart Contracts?

Smart contracts eliminate the likelihood of fraud.

In the case above, no lawyer can manipulate the contract or hide conditions, because the smart contract simply won’t execute.

It’s secure. Like Bitcoin, the Ethereum blockchain exists on thousands of computers all at once. There is no single point of failure.

Smart contracts also remove the need for trust in one particular party (like an estate agent or lawyer). The contract is verified by many hundreds of people on the blockchain.

Lastly, the fees are lower. With fewer middle-men, there are fewer costs to pay.

The Countless Use Cases for Ethereum

The potential for Ethereum is phenomenal. It can be used to decentralize everything.

Imagine an electoral voting system on the Ethereum blockchain. Every vote is recorded transparently. No third-party can manipulate the results. No more human error in counting. No more electoral hacks.

Imagine an insurance system built on Ethereum. If your house is flooded, and the damage meets all the agreed criteria, an Ethereum smart contract automatically executes to pay out the settlement.

Ethereum could improve almost every industry on the planet, from healthcare to finance to academia to logistics.

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Part 2: What Is Ether? the Cryptocurrency That Powers the Blockchain

When people talk about ethereum as a cryptocurrency, they’re actually talking about ether (ETH).

Ether has enjoyed incredible growth (10,000% in 2017 alone). But if ether isn’t a global cash system like bitcoin, what is it?

a chart depicting ethereum's price movement through 2017 - 2018

Ether is often referred to as the “fuel” or “gas” that keeps the Ethereum network running.

It’s a form of currency for developers who build apps and smart contracts on the system.

Let’s say you’re building an app on Ethereum. You pay a transaction fee to build on the Ethereum network, in the same way you’d pay a “hosting fee” for building a traditional website.

If you want to make changes to that app at any point, you pay a further transaction fee. These fees are proportionate to the amount of computer power needed.

That ether fee pays “miners” that maintain the Ethereum blockchain and verify the transactions.

vitalik buterin ethereum circle“Bitcoin and Ethereum are doing different things. Bitcoin is a digital currency, and the protocol is written to sustain this cryptocurrency. Clearly, Ethereum platform has ETH, it is also a digital currency, but it exists to sustain the protocol.” – Vitalik Buterin, Ethereum founder.

 

In other words, the Bitcoin blockchain exists solely to power the cryptocurrency. With Ethereum, it’s the other way round. Ethereum’s cryptocurrency (ether, or ETH) exists solely to power the vastly more powerful blockchain.

What Affects the Price of Ethereum?

In theory, the price of ether should be linked to the growth of the Ethereum blockchain. The more developers build on Ethereum, the higher the demand for ether to pay for transaction fees.

Right now, however, the price is primarily driven by speculation. Like bitcoin, ether is bought, sold and traded on exchanges around the world. Most people hold ether because they hope it will increase in value, not to actively build on the network.

Ether is also heavily tied to the price of bitcoin. Despite wildly different use cases, ethereum and bitcoin have a correlation as the cryptocurrency market moves, by-and-large, as one.

Unlike Bitcoin, Ether Supply Isn’t Capped

While bitcoin has a hard cap (only 21 million bitcoins will ever exist), ether does not.

Founder Vitalik Buterin has suggested a 120 million cap on ether supply, but it’s worth pointing out that his suggestion was posted on April Fool’s Day. However, he later confirmed that a hard-cap was worth considering.

As for current supply, 60 million ether was distributed during the first crowdfunding round in 2014. A further 12 million was gifted to a team of developers working to improve the system, known as the Ethereum Foundation.

Until recently, ether miners generated 18 million ether annually (about five ETH for every block, roughly 12 seconds). Under a new agreement, the community decided to cut the reward down to two ETH per block.

Ethereum Mining

Mining ether operates in much the same way as bitcoin.

ethereum mining

Miners are responsible for maintaining and verifying transactions across the blockchain. In return, they are rewarded with ether.

Transactions are verified and logged in the blockchain by solving complex puzzles (through computer processing). The first miner to solve a particular puzzle mines the block and is rewarded with ether.

Ethereum mining is significantly faster than Bitcoin. While bitcoin blocks are produced every ten minutes, Ethereum blocks are mined every 12 seconds.

Another key difference is who mines Ethereum.

The Ethereum community has always stressed the importance of mining by individuals, not giant corporations and mining pools. In that sense, Ethereum aims to be more democratic and less centralized. (We should point out that large mining pools do still dominate the majority of Ethereum mining).

 

PART 3: Who Founded Ethereum? (A Brief History)

Vitalik Buterin founded Ethereum in 2013 when he was just 20 years old.

Buterin was a huge fan of bitcoin. In fact, he also founded Bitcoin Magazine – one of the leading authorities in the crypto space.

In 2013, he published a white paper outlining his vision for Ethereum. Buterin sent the white paper to some close friends for critical feedback. Instead of criticism, however, he got a handful of co-founders!

More than 30 people wanted to work on the project with him. Ethereum was born.

Vitalik Buterin officially launched Ethereum in 2014 and unveiled the project at a Bitcoin conference. Shortly after, they launched a crowdfunding campaign to sell the ether token.

ethereum timeline

Infographic: Brave New Coin

A Moment That Changed Ethereum Forever

Ethereum has suffered some huge setbacks on its road to becoming the world’s second-biggest cryptocurrency.

The Ethereum “hard fork” was perhaps the most notable.

Here’s what happened. In 2016, hackers stole $55 million worth of ether. (Like Bitcoin hacks, we should point out that the hack did not breach the Ethereum blockchain itself, but software built upon it).

The Ethereum community faced a game-changing decision.

They could reverse the hack (by “resetting” the blockchain) and return the stolen money.

Or they could do nothing, accept the breach and move on.

Both options were problematic.

If they did nothing at this early stage of Ethereum’s development, it would damage the project’s credibility (who’s going to trust their money to a system with such a high-profile hack?)

But if they reversed the hack, it would fundamentally go against the values of Ethereum. The blockchain is supposed to immutable and irreversible.

Ultimately, the community voted to “reset” the blockchain, reversing the hack and returning the stolen money.

However, many Ethereum purists were furious. They believed the blockchain must never be reset. The decision spawned a new cryptocurrency: Ethereum Classic.

Ethereum vs Ethereum Classic

Resetting the Ethereum blockchain created a hard fork.

You can think of a hard fork like a train track splitting in two. The currencies share one single track until a certain point when they split and go off in different directions.

The so-called purists took one track with the $55 million hack still coded into the blockchain. This is now the Ethereum Classic blockchain.

The other track is Ethereum as we know it today: the “reset” blockchain, without the $50 million hack.

PART 3: How to Buy and Store Ethereum

How to Buy Ethereum

Ethereum is usually bought and sold on an exchange, much like bitcoin.

The most popular exchange in the US is Coinbase, but there are many others around the world.

coinbase buy ethereum

You’ll be asked to register an account on the exchange, which often means uploading a picture of your photo ID and proof of address. This is to satisfy KCY (Know Your Customer) and AML (Anti-money-laundering) rules (p.s. want to buy ethereum without ID? Keep reading below).

You can then buy ethereum using USD or your local currency of choice, depending on the exchange.

Can I Buy Ethereum Anonymously?

Yes. There are some exchanges that do not require photo ID or proof of address. However, you may have to buy ether using another cryptocurrency to do this.

For example, you can purchase bitcoin anonymously using the Bitmex exchange.

You can then use bitcoin to purchase ether anonymously on another exchange such as shapeshift.io.

How to Buy Ethereum with Cash

If you really want to go off-grid, you can buy ether with cash. Localethereum.com connects you anonymously with local ethereum sellers. Sellers are verified and rated by buyers, so there is an element of confidence here.

You can arrange a face-to-face meeting to exchange crypto or make a private transfer arrangement. Even your messages on localethereum are encrypted, so it’s private from the start.

How to Store Ethereum

Once you’ve bought ethereum from an exchange, you need to move it to a safe wallet.

You can leave your ethereum in your account on Coinbase or whichever exchange you’re using. However, this storage method is more vulnerable to hacks. (Hackers are more likely to target a large exchange than one smaller wallet).

Choosing an Ethereum Wallet

The right ethereum wallet depends on how you plan to use the ether currency.

If you are investing in ethereum for the long-term, consider a cold storage option. This keeps your ethereum offline so it cannot be accessed by hackers.

Read more: What is Cold Storage for Cryptocurrencies?

However, if you’re using ether to make regular transactions or trades, you might want a “hot wallet” connected to the internet.

Ethereum recommended wallet – A simple choice is Ethereum’s recommended wallet, called Mist. It allows you to store ethereum and any other cryptocurrency built on the Ethereum network. You can also use this wallet to write and execute smart contracts and build Dapps (more on this later). The wallet is downloadable at ethereum.org.

Hardware wallet – While the Ethereum wallet is handy for regular usage, consider a hardware wallet for cold storage. This is a like an external hard drive for cryptocurrencies. While it’s the safest option, there is a downside: if you lose the hardware wallet, your ethereum is gone forever. Popular options include Trezor and Ledger (pictured below).

ledger nano cold storage ethereum wallet plugged into a laptop

Paper wallet – A paper wallet is another form of cold storage. It’s a simple piece of paper with your ethereum public and private key written down. Paper wallets are incredibly safe because no-one can hack a piece of paper. But if the paper is lost or damaged, so is your ether.

Browser walletMetaMask is a browser extension for Google Chrome. It allows you to access Ethereum Dapps and store ether. Be aware, however, that your private key is stored by the browser and can be hacked.

Other ethereum wallets – Another popular option for storing ethereum is MyEtherWallet. It’s a unique web wallet that stores your private key safely on your computer. You can also use it to create smart contracts. Exodus is a desktop wallet with functionality for seven different cryptocurrencies.

PART 4: Can I Build on the Ethereum Network and Access Dapps?

Yes!

The whole point of Ethereum is to encourage developers to build on its ecosystem.

Anyone can build Dapps, write a smart contract or create a new cryptocurrency.

It all revolves around the Ethereum Virtual Machine (EVM): the nerve center (or brain) of Ethereum.

The EVM means developers can build on Ethereum with relative ease (without starting from scratch with complex code). To be clear, this is still advanced territory for the average user. While the EVM aims to simplify the process of building Dapps and smart contracts, it still requires advanced technical knowledge.

(Interesting fact: the EVM is ‘Turing Complete’ which means it has the potential to solve any algorithm thrown at it by developers. As a comparison, the Bitcoin network is not Turing Complete as it only handles monetary transfer).

Here’s where to start when building or accessing Dapps and smart contracts:

State of the Dapps

state of the dapps screenshot

State of the Dapps is a list of all existing dapps on the Ethereum network. It’s the easiest way to see what’s out there right now. All the dapps are categorized into genres, most-used, and top-rated lists. If you’ve already built a dapp, you can submit it to the site, too.

Ethereum Mist Browser

The Mist browser is Ethereum’s official wallet. It’s also a gateway to the world of Dapps and smart contracts.

To get started, download and install the Mist wallet.

When you launch Mist, you are now connected to the Ethereum blockchain. Create an account, and you can use this browser to send and receive ether.

You can also hit the “Contracts” tab to create your first smart contract.

ethereum mist wallet with 'contracts' tab circled

Lastly, there’s a search button which allows you to use the many thousands of Dapps on the network.

MetaMask

MetaMask is a browser extension for Chrome that gives you access to Ethereum Dapps and smart contracts.

The bonus of using MetaMask is that you don’t have to download any software (or the blockchain itself).

It works in much the same way as Mist. You can send and receive ether, create smart contracts, and browse the world of Dapps.

Five of the Most Impressive Ethereum Dapps

Golem – Golem is a revolutionary project that allows you to “lend” your idle computer power to others. Imagine you’re a video maker who temporarily needs more processing power to finish a project. Or a corporation that needs extra data storage space quickly. With Golem, you simply borrow it from others around the world by connecting to the blockchain. Users are paid in the Golem cryptocurrency (GNT) to rent out their computer power.

uPort – uPort is a Dapp built to protect and manage your identity. Using the uPort software, you enter your personal details into a smart contract. Your identity is only shared when certain conditions (which you set) are met. In other words, it gives you complete control over your identity and whom you share data with.

Augur – Augur lets you predict, and bet on the outcome of, just about anything. From the presidential election to the weather to the success of Apple’s next iPhone. You make the prediction and you then ‘trade’ the outcome alongside thousands of others. Augur launched its own cryptocurrency, REP, which is used to reward those that confirm or “report” the outcomes.

Cryptokitties – We mentioned crypto kitties before, but it’s worth repeating. At its core, cryptokitties allows you to buy and trade cartoon cats. Trading rare cats might not be the most powerful use case for Ethereum, but it has become a gateway for mainstream blockchain use. It’s the first truly viral phenomenon in blockchain, hinting at the enormous potential of the technology. It introduces people to Ethereum in a fun, engaging way.

Idex – Idex is building a decentralized exchange for trading Ethereum-based cryptocurrencies. Because it’s based on the blockchain (and not on a traditional server like, say, Coinbase) it’s reportedly more secure from hackers. It uses smart contracts to execute trades.

There are more than 1,800 dapps currently out there with more added every day.

PART 5: What’s Next for Ethereum and Who Are Its Competitors?

After the explosive growth in value in 2017, ethereum spent most of 2018 cooling off.

However, that’s not to say the platform itself isn’t growing…

Fortune 500 Companies Are Using Ethereum (JP Morgan, Microsoft, Intel, Cisco, Mastercard)

If you think Ethereum is just for cryptocurrency insiders, think again.

Some of the biggest companies on the planet are experimenting with the technology. Microsoft, Intel, MasterCard, Cisco, and JP Morgan are all part of the Enterprise Ethereum Alliance, an organization built to advance Ethereum.

Ethereum Alliance list of companies

It’s still early days but blockchain technology has the power to change entire industries. Most smart businesses are dabbling in this new world, and they’re using Ethereum as a testing ground.

Competition from New Projects

Being the first doesn’t always guarantee success.

The platform now faces huge competition from so-called “Ethereum-killers.”

EOS is perhaps the most notable. The project, which was built on Ethereum before launching its own mainnet, is built for Dapps. It is arguably faster, cheaper and more efficient than Ethereum.

Other competitors include Zilliqa, which aims to scale faster than Ethereum, and NEO which facilitates smart contracts without Ethereum’s complexity.

Ethereum’s Scaling Problems

One of the big question marks over Ethereum’s future is its ability to scale. How can it get faster and more efficient?

Developers are currently working on a long series of upgrades to the system. Under the codename “Casper,” Ethereum is slowly shifting from a “proof-of-work” system to a “proof-of-stake” system.

Without getting too technical, this should reduce the computer power required to mine ether and keep the system running.

Ultimately, it will lead to faster transaction times and lower fees.

Watch Vitalik Buterin talk about his plans for scaling Ethereum below:

For now, Ethereum remains the go-to platform for building new technology. It is the gateway to the blockchain, and we are only just scratching the surface of its potential.

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what is ethereum?

Ethereum is the second-biggest cryptocurrency after bitcoin.

But ethererum is nothing like bitcoin.

While bitcoin aims to revolutionize money, ethereum aims to revolutionize… everything else!

The first thing we suggest in this ebook is to stop thinking of ethereum as a money system.

Instead, think of it like Lego. Ethereum is a place for building things with blockchain technology.

We know that blockchain is revolutionary, but Ethereum actually gives us an easy way to use it.

That’s why huge companies like J.P. Morgan, BP, and Intel are experimenting with the Ethereum blockchain to create new apps and services.

The potential for Ethereum is phenomenal. But there are lots of hurdles to overcome. A few hundred words are not enough to cover the topic, especially if you’re looking to invest in the cryptocurrency.

That’s why we created this eBook:

Ethereum: Absolutely Everything You Need To Know (In Simple Terms) 

It’s completely free (no email address required, either).

The book will answer all your questions about ethereum:

What is Ethereum

  • Who created it?
  • How does Ethereum work?
  • Where does the cryptocurrency come in?
  • Why are major banks and companies using Ethereum?
  • How do I buy ethereum?
  • How do I store it safely, away from hackers?
  • What’s next for Ethereum?

Download Now.

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We are home to the longest-running bitcoin block explorer, a tool for tracking bitcoin transactions.

We are cryptocurrency pioneers.

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Block Explorer aims to bring bitcoin to the mainstream with simple, easy-to-understand guides.

Absolutely Everything You Need To Know About Ethereum is the second in our flagship series of cryptocurrency ebooks. To learn more, check out our Bitcoin eBook too.

cryptokitties dapp

In late 2017, cartoon cats appeared all over the blockchain.

Pretty soon, people were breeding these digital cats, swapping them like Pokemon cards, and selling them for over $100,000 dollars.

Cryptokitties became a sensation. It’s the simplest example of a dapp (and easily the most high-profile one out there).

cryptokitty dapp breeding

Quick Dapp definition: Dapp is short for “decentralized application.” Think of a mobile app or website application, but hosted on a blockchain. In other words, it can’t be controlled by any one gatekeeper (such as Apple).

Dapps, like Cryptokitties, open up blockchain technology to a mainstream audience. If there’s ever a future where we’re using blockchain on a day-to-day basis, we’ll probably be using dapps.

In this article, we explore the difference between apps and dapps. We also look at ten of the most popular dapps out there. 

App vs. Dapp: What’s the Difference?

Traditional Apps – When we think about traditional apps, a single entity typically controls the database and is responsible for determining whether or not that app can exist. For instance, the Apple App Store and Google Play have total control of hosting and maintaining applications.

These companies also charge developers high fees for hosting, and they earn large profits from sales. For example, Apple gets 30% of all revenue from app and in-app purchases.

Dapps – Perhaps the most fundamental difference is the way in which data is stored. While traditional apps use a centralized database, dapps run on blockchains, which are decentralized networks (i.e. no single entity owns or controls it).

dapp infographic
Credit: @angelomilan

From a user standpoint, dapp stores generally offer a much lower fee structure. They also offer more freedom in the sense that a single entity can’t serve as a gatekeeper. Truly decentralized blockchains don’t allow one party to censor users or dapps.

Thus, developers have the ability to more easily release dapps without having to worry about third-party interference or rely upon the approval of the blockchain creators. Some examples of popular dapp stores include Mobius, app.co, and iExec.

Most Popular Dapps in 2018

The following are some of the most popular dapps as of October 11, 2018. Stats were found on DappRadar. Rankings span across four categories (gaming, exchanges, gambling, and high-risk). Also, it’s important to note that rankings could change at any time in the future, especially as new dapps enter the market.

This is not a recommendation list! You might even want to avoid using some of the dapps mentioned here, especially those in the gambling and high-risk category.

Gaming Dapps

1. CryptoKitties

When it comes to decentralized application games, CryptoKitties is the clear winner of this category ever since its launch in 2017. It’s a game that allows users to collect unique cartoon cats.

cryptokitties dapp

While there have been many popular collectible series in the past, CryptoKitties adds several unique elements thanks to blockchain technology. For instance, each CryptoKitty is represented in the form of a non-fungible ERC-721 token, which allows for each entity to have specific “cattributes”. This means each cat is truly one-of-a-kind. As a result, this has lead to the growing popularity of CryptoKitty auctions.

How popular is this dapp? In December 2017, CryptoKitties accounted for massive congestion on the blockchain. At one point, it cornered 25% of all Ethereum traffic, causing longer transaction times and higher fees.

This dapp is also becoming increasingly mainstream. For example, in March 2018, the company partnered with NBA star Stephen Curry to launch the first celebrity-branded CryptoKitty collectible series.

2. Gods Unchained

The level of support within the blockchain industry (not to mention the amount of venture capital) for this dapp is impressive. Gods Unchained features Coinbase, Nirvana Capital, Continue Capital, and several others in its partners and investors list.

gods-unchained dapp

According to the project website, this is the first ever blockchain eSport. Gods Unchained is a multiplayer game where users battle each other as well as trade, sell, and store gaming cards. Smart contracts guarantee the scarcity of everything in the game from creatures to spells to weapons.

According to the future roadmap, there will be a world championship for this game early in 2019. As of October 2018, around $350,000 has been raised to go towards the payouts for this event. The fundraising goal for the tournament is set at $1.6 million. In the future, users can also expect a release of Gods Unchained VR.

Crypto Exchanges

3. IDEX

According to statistics, IDEX is the most popular Ethereum-based crypto exchange on the market today. While other exchanges like Coinbase/GDAX, Kraken, and Binance are centralized, IDEX is a decentralized exchange, commonly referred to as a DEX.

idex dapp

This means that users have full control over their own funds and own their own private keys. IDEX ranks high in terms of security and customer support. It also features lower fees than centralized exchanges. For example, market makers pay 0.1% fees, and market takers only pay 0.2%. However, fees can be higher at network traffic peak times.

DEX appears to have a massive lead over other exchanged like ForkDelta and Bancor when looking at seven-day trade volume.

4. ForkDelta

ForkDelta only lists ERC-20 tokens (tokens used exclusively on the Ethereum network). Originally, this exchange was called EtherDelta. However, it failed to live up to user expectations and was sold in mid-2017.

Later on, it was rebranded as ForkDelta by a group of traders that launched the exchange. ForkDelta uses smart contracts to complete trades.

Similar to other decentralized exchanges, it offers relatively low fees (0.3% for order executions). While trades are not instantaneously carried out as seen in some centralized exchanges, ForkDelta does offer innovative integrations. For example, it’s possible to connect a Ledger Nano S wallet to the platform.

Compared to other decentralized exchanges on the market, it ranks high in terms of trade volume and liquidity.

Gambling Dapps

The following gambling dapps are not a recommendation and anyone using them does so at their own risk.

5. Fomo3D

Gambling-focused projects are quickly becoming one of the most well-established blockchain use cases. Fomo3D, the top gambling dapp in this space, ironically pokes fun at one of the main issues with blockchain: greedy ICO project teams. According to the dapp website, “it’s your exit scam”.

fomo3d dapp

There are two games: Long Con and Quick Scam. They are built to simulate the standard hype, release, pump, and dump cycles of the countless ICO exit scams across the cryptocurrency space.

Much like a real Ponzi scheme, thousands of gamblers lost Ethereum funds (ETH) playing the game. However, in August 2018, one user actually won $3 million worth of ETH in the first-round jackpot.

At first, there wasn’t much info available on how users can win or lose the game. However, we have since seen an emergence of detailed articles trying to discern the strategies of the first-round winner.

Even with a high potential for losing funds and high blockchain congestion, multiple rounds of large jackpots make this dapp one of the most interesting, popular, and controversial gambling options on the market today.

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6. Etheroll

Etheroll is a provably-fair casino game. Unlike traditional online or casino gambling, decentralized blockchain gambling is able to demonstrate the real chances of winning. This is good news for gamblers who might be concerned about falling victim to large house edges. No deposits or signups are required to play this virtual dice rolling game.

etheroll dapp

Users can not only choose how much ETH they want to bet but also pick their probability of winning. A lower probability of winning presents a higher payout potential. A higher probability of winning presents a lower payout potential. This game is quite simple to get started wagering bets.

7. Zethr

Compared to Etheroll and Fomo3D, Zethr provides a larger selection of casino games. Users can purchase and use Zethr tokens to participate in a variety of gambling options on the platform. These include slots, dice, big wheel, and cards. Users can determine their own dividend rates.

zethyr casino dapp

Just like Etheroll, Zethr uses a provably fair algorithm for all games on its platform. This project also has a few different sites for game playing guides and platform usage stats. So for those users who might be unfamiliar with how Zethr games work, this information can help to understand more about this popular blockchain-based gambling site.

8. Augur

Technically, Augur is not a gambling dapp. On DappRadar, it is listed in the “other” category. So what is Augur exactly? This dapp serves as a prediction market. In essence, users can bet on the outcomes of future events using ETH or REP (Augur’s native cryptocurrency).

augur dapp

For example, users can bet with each other on which candidate will win an election or even catastrophic events. Unlike gambling dapps where outcomes are part of computer code, Augur makes it possible for users to create their own markets. Augur also utilizes a permissionless protocol and offers automated payouts once an outcome is declared.

Eventually, Augur aims to become more than just a betting system. It is pitching itself as a business and political forecasting tool.

High-Risk Dapps (Proceed With Caution)

9. 333 ETH

333 ETH is listed under the high-risk category on DappRadar. Why is this the case?

The reality is that this dapp does sound like a scam. Even despite this, it has become one of the top decentralized applications on the market. According to the project website, one only has to have contributed 0.001 ETH per day and will earn 3.33% daily interest (paid in ETH).

As you might have heard, there are scams (especially on Twitter) where people impersonate famous crypto influencers or project teams. They ask other users to send smaller amounts of crypto in order to get a larger sum in return.

333 ETH appears to be a similar concept. It relies upon more and more people contributing to the project. This is why some sites like Mashable called 333 ETH an outright Ponzi scheme.

This is not a recommendation and anyone using 333 ETH does so at their own risk.

10. Crypto Miner Token

The concept behind Crypto Miner Token (CMT) is similar to that of 333 ETH. According to the project website, CMT is used to help miners earn larger profits. In summary, miners that earn 1 ETH, for example, typically let this amount sit idle in their wallets.

By converting it to CMT, miners are (at least according to the website) able to earn more value. The website also mentions 10% transformation and 4% withdraw fees for CMT participants. These are high amounts by any standard and part of what makes this dapp appear fishy.

This is not a recommendation and anyone using Crypto Miner Token does so at their own risk.

Which Blockchain Will Be the Go-to Platform for Dapp Developers?

The ten dapps mentioned above all utilize the Ethereum blockchain. This is likely because Ethereum is the most well-established dapp platform and largest by trade volume on the market today. This momentum means developers continue to utilize this platform.

ethereum vs eos infographic
Credit: Bitgenste.in

However, Ethereum faces competition for the most dominant platform for dapps. EOS, NEO, and others are all building similar dapp ecosystems for developers and users alike.

Which will become the most popular? A number of factors like throughput, scalability, and security will determine which platforms are technically prepared for mainstream user adoption in the future.

There are also dapps for a variety of blockchain use cases beyond just those mentioned above. It will be interesting to see how this market changes in the coming years, especially with emerging improvements in blockchain technology.

In conclusion, dapps make it possible for blockchain use cases to move from mere ideas to real-world solutions. We are only now beginning to see the rise of decentralized applications and their potential to positively impact specific industries and drive web 3.0 and blockchain forward.

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At a Glance: 10 Popular Dapps in 2018

DappDescription
CryptokittiesA game for collecting unique cartoon cats (like Pokemon cards on a blockchain).
Gods UnchainedA multiplayer game touted as "blockchain's first esport."
IDEXA decentralized cryptocurrency exchange.
ForkDeltaAnother decentralized exchange, specifically for Ethereum ERC20 tokens
Fomo 3DA gambling app built on Ethereum.
EtherollA casino app with transparently fair odds.
ZethrAnother casino app with a wider range of games.
AugurAn app for "betting" on the outcome of just about anything - from presidential elections to the weather.
333 ETHA controversial "high-risk" app based on a ponzi-scheme.
Crypto Miner TokenAnother high-risk app. Claims to increase miners' idle profits.

bitcoin

The top securities regulator in the United States says that bitcoin is not a security under federal law.

Speaking on Thursday in a hearing before a House Appropriations subcommittee, Securities and Exchange Committee (SEC) Chairman Jay Clayton told lawmakers that cryptocurrencies which function exclusively as mediums of exchange are not securities, unlike initial coin offering (ICO) tokens, which are.

He said:

“It’s a complicated area. Because, as you said, there are different types of cryptoassets. Let me try and divide them into two areas. A pure medium of exchange, the one that’s most often cited, is Bitcoin. As a replacement for currency, that has been determined by most people to not be a security.”

“Then there are tokens, which are used to finance projects. I’ve been on the record saying there are very few, there’s none that I’ve seen, tokens that aren’t securities,” Clayton added. “To the extent something is a security, we should regulate it as a security, and our securities regulations are disclosure-based, and people should follow those and provide the information that we require.”

Clayton’s comments are consistent with statements that he has made in the past regarding the difference between “pure” cryptocurrencies like bitcoin and tokens, which the SEC says fall under US securities regulations.

Recently, a group of Silicon Valley heavyweights met with the SEC to attempt to convince them to provide safe harbor to most ICO tokens — as well as ethereum — but the agency is said to have not been overly receptive to the proposal.

That ethereum was on the agenda turned many heads, as it is the second-largest cryptocurrency and has been assumed by many ordinary users to be exempt from securities regulations.

However, as many newer users may not realize, the ethereum’s initial development was funded through a presale in 2014, though new units of ether have been distributed through mining since the network officially launched and will eventually be issued through a Proof-of-Stake (PoS) consensus algorithm.

For this reason, former markets regulator Gary Gensler argued earlier this week that ethereum is likely a “noncompliant security.”

However, Gensler — who chaired the Commodity Futures Trading Commission (SEC) during the Obama administration and now lectures on blockchain technology at MIT — said that ethereum was perhaps more likely than XRP to receive safe harbor from regulators, since ETH distribution has become decentralized over the previous three years while XRP issuance is controlled solely by a single entity: San Francisco-based company Ripple.

Featured Image from Pixabay