Over $20 billion worth of Ether is purchased daily. To understand why demand is so high, let’s look at how it is used. In this article, we will describe the most popular examples of what you can do with Ether after purchase.
Use in financial applications
50,000 people use financial apps based on Ethereum every day, according to Dapp Review. In contrast to centralized apps, on blockchain-based platform users are in control of their funds and data.
Loans. Lending services are traditionally provided by banks. Their customers often face difficulties: rejection due to a low credit rating, high interest rates, long registration periods. The economy always needs loans, so banks rarely have to think about easing their conditions.
Blockchain-based lending is a good option for countries with inefficient banking systems. Any user can make a deposit and, depending on its amount, get a loan in cryptocurrency. You don’t need to collect income certificates, tax returns, or other documents. You don’t even have to wait for approval, because when the smart contract conditions are met, the cryptocurrency is automatically credited to the account.
Example. Aave, an Ethereum-based application, allows you to take a loan. By linking an Ethereum wallet, you can borrow any of the 22 cryptocurrencies from the service. You will not have to risk your property, but the coins that you made a deposit with.
Holding. To issue loans and provide other financial services, banks attract funds using customers’ deposits. The profitability of such deposits is low. Deposits in European banks with the ability to top it up and withdraw funds bring up to 3% per annum.
Decentralized Finance provides an opportunity for deposits in cryptocurrency. Users lend their funds to a project and make a profit out of it. Blockchain platforms are more transparent and easier to use than traditional tools.
When working with Decentralized Finance, the risks will be higher than with a bank deposit. There may be a situation when the ETH deposit is devalued due to a sharp drop in the coin exchange rate. You should carefully approach the choice of cryptocurrency.
Purchase of a digital property
Most of the decentralized applications are related to Finance. But the Ethereum blockchain also hosts services for other purposes: from entertainment to art.
Copyright. Without blockchain, it is difficult to protect intellectual property in the modern world. Drawn images, research texts, or databases are easily vulnerable to illegal use or misappropriation. Legal registration of copyright for digital data involves a lengthy procedure and high costs.
Some blockchain companies already offer intellectual property protection tools. Any physical and digital objects can be assigned to the author. This allows users to transfer ownership in a cheap and convenient way. This is possible thanks to the use of non-fungible tokens — NFT. Unlike cryptocurrencies, where all tokens are identical, NFT is unique and can be linked to a specific object.
Example. The Rarible service is an autonomous platform for buying and selling digital works. You have found an artist who sells his painting for 0.2 ETH. He set a royalty of 10%. After paying the required amount, you get the right to use this picture and can sell it at a higher price, for example, for 0.5 ETH. This is where the royalty system works: the creator will automatically receive 10% of this transaction.
In-game items. Another popular use case of digital property rights is online games. Most of them work on a centralized model. This means that accounts and in-game items are stored on the server and are fully controlled by the game developers. Players do not buy the right of ownership, but only the right to use it. This leads to a number of unavoidable consequences: technical failures, unfair bans, manipulation of the game economy, etc. Developers can even abandon the project and the game will simply stop working.
Blockchain protects any type of digital data, including gaming data. All game items are linked to NFT tokens and the user can buy, sell and exchange them outside of the game itself. In addition, players can continue to play even if the developers leave the project. As long as the game is played by at least 1 person, it will work. In some cases, new developers can continue working on the game.
Example. Decentraland stands out among entertainment projects. This is a virtual world where the main asset is real estate. When registering, you link your Ethereum wallet, which later serves as a digital passport. In the virtual world, you visit places created by other players: attractions, museums, galleries, and concert venues. You can buy a piece of land in any location you like and build a store to promote your offline business.
Digital ownership rights transfer on the Ethereum blockchain makes life easier for both buyers and sellers. Musicians, video game creators, and artists can easily monetize their creativity. At the same time, smart contracts will provide automatic protection against piracy and plagiarism.
You can conduct international transfers
One of Ether applications is money transfer to another country. A transaction in the blockchain will be cheaper and faster than a bank transfer.
Fees. International transfers from card to card can usually be made for no more than $2,000. If the recipient has a current account or the sender has reached the limit on the card, a SWIFT transfer is required. SWIFT is an international interbank payment system. For this service, banks charge a significantly higher fee than for other operations.
For Ether transactions, the fee is always the same. It doesn’t matter whether you send 0.1 ETH or 100 ETH — you will have to pay 1-2 dollars on average. The fee is affected by the current network load. Up-to-date data on Ethereum fees can be found at ETH Gas Station.
Example. Let’s say you live in China and your family lives in the United States. You work there and periodically send the money you earn abroad. When transferring yuan to a United States card, you pay a fee for international transfers and conversion is done at an unfavorable exchange rate. The transfer with conversion to ETH does not depend on the amount and expenses will amount to a maximum of $2.
Speed. Another problem with international transfers using intermediary banks is transaction duration. A SWIFT transfer takes anywhere from 30 minutes to 5 business days. In addition, if you transfer more than $ 10,000, you will need to go to the bank branch to do paperwork in person and confirm the purpose of the payment.
When transferring cryptocurrency, there are no restrictions on the maximum amount. Just specify the recipient’s wallet address, the amount in ETH, and the fee. The processing time of the transaction will depend on the fee paid — the more you are willing to pay, the faster the transaction will be processed. If the default fee is chosen in the wallet, the transaction will take from 15 seconds to 2 minutes.
Example. You live and work in China, and your child is studying in the United States. You need to send him money to pay for the tuition. Since the amount is over $ 10,000, the bank will require supporting documents: the payment invoice, the tuition contract, and the birth certificate. In addition, the transfer will take up to 5 business days, you will need to spend time collecting documents and visiting the bank’s office. A transfer with conversion to ETH avoids unnecessary steps and takes no more than an hour in total.
If the recipient’s address is specified correctly, the transaction will be successful. No one can block the transfer and the entire amount will reach the recipient.
How to buy Ether via a P2P exchanger
Ether is a multifunctional token that can be used both for decentralized applications and as an alternative to traditional money. Let’s look at how to buy ETH using Advcash in the web version of the Bitzlato P2P exchange. To do this, follow these steps:
Step 1. Registration and login. Click «Register» and enter your email address and password. After logging in, go to the «P2P» section.
Step 2. Look for an offer. You can use the filter to find a suitable offer. Choose: buying — ETH, currencies — USD, payment method— advcash.
Step 3. Start of the transaction. When you have read the trade terms, select the desired amount of ETH and click on the «Start trade» button. Wait until the seller confirms participation in the trade and the page will display the details that you need to send funds to.
Step 4. Transaction completion. When you send the funds and send all the necessary information, click on the «I have paid» button. When the transaction is confirmed, the seller will send the coins.
In this article, we have analyzed cases where it is easier and more convenient to use Ether rather than traditional currency. Make an international transfer, take a loan, make a deposit, buy a digital painting or a game item — all these tasks can be easily solved with the help of cryptocurrency. At the same time, Ethereum is a fast-developing project, so its scope will only expand.