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When Ethereum first came into public prominence in 2017, it was suddenly lauded as āBlockchain 2.0ā, āthe Bitcoin killerā, or āthe blockchain with better technologyā. The concept of automatically executing transactions called āsmart contractsā, among the other buzzwords like āworld computerā, had investors and blockchain enthusiasts head overĀ heels.
The boom of Ethereum and the price of Ether was driven in a significant part by the utilization of the smart contract platform for executing ICOs. With a combination of the crypto market crash, ICO sell-offs, and deflated investor confidence, the recent ETH price lows in USD have declined to Q2 2017 levels, more than 90% down from its peak atĀ ~$1,400!
ICO Funding vs ETH Price, 2017ā2018. Ref: https://www.icodata.io/stats/
Needless to say, things are currently looking a bit grim for Ethereum. With the end of the ICO era likely upon us, where will Ethereumās usage come from? Sure, the latest hype is on security token offerings (STOs), but with the tremendous amount of regulation associated with securities, STOs wonāt be such a crazy, easy, and wild ride like ICOs were. Meanwhile, we have increasingly more smart contract competitors like EOS and Cardano attempting to come into the fray, which could further dilute the marketshare for Ethereum.
Of course, one great thing about Ethereum was the amount of developer interest it was able garner. Ethereum is still miles ahead of any competition simply because of its large and active developersā community, regardless of what everyone else says in the TPS-measuring contest. With the ICO ship having all but sailed, building on Ethereum has become ever more important. Most ICOs that have promised distributed-anything-and-everything products in the past have in fact produced nothing, while a number of more legitimate projects have so far built somewhat barely usable decentralized applications, orĀ dApps.
DApps were supposed to be the āInternet 3.0ā of our new blockchain era, with everything ranging from farming to cloud storage being distributed and decentralized. However, it didnāt take long for many people to realize that āblockchainā or smart contracts are in fact not needed or make absolutely no sense for many of these proclaimed use cases. In most cases, the application of a smart contract platform simply provides an improved level of transparency and tracking to a centralized system or database, but absolutely does not achieve decentralization or bulletproof immutability for said useĀ case.
For several use cases however, dApps do provide an upgrade in terms of trust, transparency, or fee reduction, in comparison to traditional systems. Consequently, these dApps currently prove to be the most used dApps on the Ethereum blockchain, and probably the few only legitimate applications for āblockchainā going forward. These use cases so far are restricted to decentralized exchanges (DEXs) for trading and decentralized gambling platforms. In other words, the dApps that make the most sense so far are ones which replace third party escrow services, where usersā funds remain in their wallets and can be exchanged directly through the dApp. To put it more blatantly, if you take away the developer team/company and the users are still able to trade/exchange assets via the dApp as before, then we probably have a good dApp useĀ case.
Disclaimer
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