You may know that Ethereum is the world’s second-biggest cryptocurrency after Bitcoin. But the blockchain-powered platform is much more than that.
Because it is a decentralized network for running smart contracts - programs stored on the blockchain—it can be used for creating decentralized applications (dapps). This is a big deal for idea a decentralized internet, known as “Web3”, and for the ways users will interact with that new web, known as the metaverse.
As the next stage of the web emerges from its nascent phase, Ethereum and Web3 are tied closely together—even the term “Web3” was coined by Ethereum co-founder Gavin Wood.
Let’s take a look at some of the ways Ethereum plays a role in the future of the web.
Despite stiff competition from other networks, Ethereum still reigns supreme as the most popular place for creators to build non-fungible tokens (NFTs). These are expected to form a core part of what the metaverse has to offer, giving users a way to fully own digital assets.
Some of the most famous collections in the space are built on Ethereum, such as CryptoPunks and the Bored Ape Yacht Club. Marketplaces for selling NFTs, like OpenSea, also have a home on the system.
In the web’s current incarnation, users have to have multiple accounts across different sites. The goal for a Web3 world is to simplify this system, and at the same time make it both secure and anonymous.
One application of Ethereum in Web3 is the use of an Ethereum address as a single log-in across multiple platforms.
Ethereum is also being used to achieve what Web3 visionaries see as an essential part of a truly decentralized web. That is the ability to send money to each other directly over the internet, with no need for a third-party bank or payments provider to get involved.
Right now, the high cost and slowness of transactions poses a threat to the mass adoption that metaverse fans hope for. But with Ethereum as the base layer, many developers are working on so-called “layer-2” networks that are faster and cheaper, in an attempt to resolve this problem.
Most fundamentally, Ethereum is providing the building blocks for many metaverse developers. The Ethereum-based game The Sandbox allows people and projects to own a piece of virtual land and develop custom features on them.
Ethereum has been used as the underlying software for everything from play-to-earn games and music apps to lending platforms and decentralized exchanges.
And perhaps more uses are yet to be imagined. Ethereum co-founder Joe Lubin has compared today’s metaverse to the internet in 1994.
“The experience of being in Web3 isn't as compelling as it will be pretty soon,” he told Decrypt in October 2022. “That's when the masses will be there.”
- Ethereum and Web3 are tied closely together—even the term “Web3” was coined by Ethereum co-founder Gavin Wood.
- Ethereum is providing the building blocks for many metaverse developers.
- Ethereum is being used to achieve what Web3 visionaries see as an essential part of a truly decentralized web.
Ethereum, like all technological revolutions, has been evolving to work out the kinks. In the next lesson, we learn about the so-called Merge of 2022, and what problems it was meant to address.