The emergence of such a phenomenon as cryptocurrency has certainly brought the idea of the denationalization of money much closer. If you have a question: Is Ethereum money?, you should first understand the concept of cryptocurrency itself.
In the case of cryptocurrency, there is exactly the same source from which it draws its value – it is convertibility into fiat money, if this convertibility is doubted by society, then the value or purchasing power of cryptocurrencies will suffer the same fate as paper money – they will lose their value. Therefore, the position of monetary authorities of leading countries on the convertibility of cryptocurrencies into fiat money plays an important role in transforming cryptocurrencies from commodities into money.
Bitcoin was the first to create a fully digital value. It solved the so-called double spending problem. For the first time, when you sent something over the Internet, you couldn’t keep a copy. On the Bitcoin blockchain, however, you can only do that with BTC. The Bitcoin protocol is incompatible with other assets.
This is where Ethereum comes on the scene: a protocol capable of digitizing and limiting any asset, not just ETH. Tokenization and the ERC-20 standard are the printing press for digital value. With it, Ethereum has become an additional technical layer of the Internet for the transmission of any digital value. Due to its openness and lack of a central controlling authority on Ethereum, it is possible to recreate any asset, set the number of its units, and transfer ownership of it between parties.
What is Ethereum
Ethereum is the foundation for building an alternative, digital financial system. It can be completely independent and open. The new financial system needs its own currency unit. Financial applications operating in this environment need to have an independent asset, uncontrolled by any public or private institution, that acts as collateral. The only fully independent asset on Ethereum is ETH.
This fact makes ETH a unique financial asset. There is such a thing as the triple point of water – the values of temperature and pressure at which water can exist simultaneously in solid, liquid and gaseous states. ETH on Ethereum can perform different functions, being simultaneously as if in different aggregate states. This makes Ethereum the best form of money humanity has ever invented.
Ethereum is a decentralized organization. It serves the Internet of Value, trying to grow its network, increase the number of users and accommodate more value. The more useful services it can provide (MakerDAO, Compound, dYdX, Uniswap), the more people willing to use Ethereum. The users of Ethereum include both the applications built on it and the customers of those applications. For the network to run smoothly, Ethereum has to pay its workers. By workers, we mean validators. They make sure that all users play by the rules set in the system. Transaction fees pay validators for the work they do, but at the same time they are the wall that protects Ethereum.