This post was originally posted on r/ethtrader DAO on May 1st, 2021. Link to original post.

We all know that no matter how much ETH has use cases, we need non technical internet users to understand ETH if we were to go mainstream.

I had to explain it to my uncle yesterday. I thought it was a good enough explanation So I figured it’d be useful for anyone trying to do the same. The following is a ELI5 explanation so it focuses less on tech and more on explainability. Also some trivial tech terms like mining, Proof of Work are used which I believe you can explain without my explanation.

What is Ethereum Network?

Ethereum is a decentralised smart contract network. Which means it is like an official paper contract database but on the blockchain. It means once the contract is published, no authority can delete it, censor it or block it. It is completely secure and decentralised so there aren't any hacks/shutdowns possible. It is like a super computer made of normal computers where one single computer isn't a representative/authority. All computers together are the network. It's a huge network where every single computer is of equal importance with no bias in any manner.

What is Ether?

Ether is the native currency of Ethereum blockchain. Just like you would be paying any server companies money, you have to pay ETH to use the Ethereum Blockchain. The exact term used is "Gas". For an analogy think of your contract as a car and gas as the fuel to run the contract. There are other uses to Ether too, like you can use ETH as a payment coin just like Bitcoin etc. You can use ETH to just store or invest and trade.

What is DeFi?

DeFi means DEcentralised FInance. It is like the whole financial system but on Ethereum Blockchain. So, all the above discussed facts apply here too. No one can take this system down, It is running 24/7 and there are many trading pairs. It is trustless so there isn't any middle man facilitatiing your deposits and withdrawals. Again, for using DeFi just like any other service, you pay gas in ETH. Not only trading, there is also lending, borrowing, liquidity pooling etc.., All these on ETH Blockchain which is incorruptible and indestructible.

What are current limitations?

The current limitation is "The Scaling Problem". Which means that the network is congested and many people are using it. This huge demand means more people are willing to use the network at same time so more the gas prices. Analogy here is that network maintenance guys(nodes) are asking more "Gas" to run your contract. So as more people use it, more Gas is needed. Especially DeFi network load itself is congesting the network so average users have to pay Gas fee in terms of hundreds of dollars at peak.

Why future remains bullish?

Ethereum's main criticism to be a store of value is that it doesn't have a fixed supply. But a new proposal called EIP-1559 is being put into effect from this year probably July 2021. What it does is it burns the gas every user pays. Meaning, the gas which you pay in ETH is LOST FOREVER. So as more people use the ETH Blockchain, more gas is paid and more ETH paid as gas is burned. So instead of fixed supply, the network kind of auto adjusts and has decreasing supply. So, more increase in demand while decrease in supply mean a huge price increase.

And then there's ETH 2.0 coming soon that transforms the slow and bulk of ETH blockchain into fast and divided small blockchains. This is too technical but what it does is it removes the mining(Proof of Work) model with Proof of Stake(environment friendly) model. And REDUCE IN GAS FEE. And so many other features...

Ethereum's true potential?

Unlimited use cases. Imagine a social media website where a tweet/post can't be censored or servers shut down. Imagine a marketplace where people/original artists can sell their work without middlemen. Imagine a bank where there's no discrimination based on credit scores etc.., with 24/7 operating time. Imagine a cab service where the customer directly pays the driver via smart contract instead of corporations like Uber taking the profit...and many more.

That's Ethereum...That's the internet of Future

Owning any little part of ETH is like owning a stock of future internet!