While blockchain technology has been around for almost a decade now, it is on recently that cryptocurrencies have witnessed huge growth and financial institutions are looking into real-world applications and adoption.
It is clear that blockchain technology has immense potential in the way we record, store and distribute data, but the foremost use has been in financial transactions so far, with Bitcoin in the lead.
Presently, the largest electronic payment networks in the world are owned by corporations like Visa, which operate globally and process trillions of dollars every year.
The increased use of cryptocurrencies as ways to transfer money has been seen as a move away from centralized corporations and towards a decentralized network, allowing people more privacy and freedom.
However, as we saw during the summer this year, Bitcoin suffered from scalability issues, leading to increased transaction times and very high fees. Litecoin stepped in and took off majorly as investors speculated for it to be the silver to Bitcoin’s gold.
Ethereum has also grown tremendously this year and has been the platform of choice for ICOs and crowdfunding campaigns. As yet though, none of these cryptocurrencies operate on a scale that can compete with the likes of Visa or other electronic payment methods.
Speaking in regards to this, Vitalik Butterin said:
“Bitcoin is processing a bit less than three transactions per second. Ethereum is doing five a second. Uber gives 12 rides a second. It will take a couple of years for the Blockchain to replace Visa.”
Ethereum itself has been created a platform or a base layer that allows other apps to be built on top and utilize the power of blockchain. Smart contracts have been a major feature on the Ethereum project and Vitalik hinted towards more use cases being developed for the future.
“You could run StarCraft on the Blockchain. Those kinds of things are possible. High level of security and scalability allows all these various other things to be built on top. Ethereum is a secure base layer that doesn’t have too many features.”
In January 2017, Ethereum was priced just under $10, and is currently trading at $290 after having reached an all time high of just over $400.