What is Ethereum?


Ethereum

Ethereum

Symbol: ETH

Published: 2015

Max supply: Not defined

Divisibility: 8 decimals

Official website: https://ethereum.org

Ethereum is currently the second largest cryptocurrency in the world. Ethereum was released in 2015 and its main developer is programmer named Vitalik Buterin. Ethereum’s operating principle differs very much from Bitcoin. Bitcoin is a payment network protocol and a value-transfer unit inside that system, while Ethereum can be considered as a complete ecosystem. The potential of Ethereum is tremendous and many people say that Ethereum is the biggest technological innovation of the entire 2010s.

Ethereum is a decentralized platform with its own blockchain. Ethereum is an entire ecosystem where everyone can build various distributed applications (Dapp), smart contracts and even own cryptocurrencies. All of these aim to be safe to use and reliable, and there is no need for middlemen such as banks or agencies. Everything is accessible and readable by everybody so it is easy to avoid getting scammed. Ethereum is by far the largest and best-known project in the platform category. Smart contracts are one of the most revolutionary things in the Ethereum-platform. Smart contracts can be used in anything, which requires some automated actions based on certain events. Smart contracts also give unprecedented trust, as all their data is stored in blockchain. When data is in the blockchain, it is impossible to tamper it afterwards. Drawing up smart contracts is also much faster and cheaper than traditional contracts. Smart contracts can revolutionize the way we make contracts in the future.

Anyone who is interested in Ethereum should know that the name Ethereum actually refers to the entire ecosystem of Ethereum. If you invest in Ethereum, you are actually buying Ethereum’s cryptocurrency Ether (ETH). Ether is known as the fuel for operating the Ethereum platform. Using Ether, it is possible to obtain computing power from Ethereum’s peer-to-peer network. By investing in Ethereum, or Ether in practice, you believe in the spread of the use of Ethereum and the growth of applications built on it.

When talking about Ethereum, an organization called the Enterprise Ethereum Alliance (EEA) cannot be ignored. The EEA brings together a number of the world’s largest companies, like IBM, Microsoft, Intel, JPMorgan and Accenture. The EEA aims to develop Ethereum to serve people and businesses around the world. The EEA proves that the world’s largest companies are slowly beginning to understand the technological value of Ethereum.

The history of Ethereum

Ethereum is currently one of the oldest cryptocurrencies on the market. Ethereum is founded by programmer called Vitalik Buterin. Ethereum’s white paper was published in 2013. Ethereum was born in ICO in 2017. In short, ICO is like crowdfunding. Thanks to Ethereum’s ICO, Ethereum collected over 20 million dollar for its project development.

In 2016, Ethereum faced the biggest setback in its history. Hackers found the vulnerability in Ethereum’s blockchain and the project called The DAO collapsed due to the hackers. The aftermath of this hacking caused massive debates. This crisis drifted to the point that Ethereum’s original blockchain was hard forked into two different blockchains. The cryptocurrency called Ethereum Classic continued the original branch of the Ethereum blockchain, while the current Ethereum is a new branch of the original blockchain created by hard fork.

The years 2017-2018 were excellent for Ethereum. Most of the new cryptocurrencies launched during that time were created in Ethereum’s blockchain. Because of that Ethereum’s contribution to the explosive growth of the market was considerable. During these years, Ethereum also rose to worldwide awareness, and several large companies began to consider how they could leverage Ethereum in their own business.

The differences between Ethereum and Bitcoin

Ethereum and Bitcoin are by far the most significant and largest cryptocurrencies in the world. However, as cryptocurrencies, they are completely different. Ethereum was originally born out of the need to create a programming language for Bitcoin. The programming language makes it possible that developers can create various applications in the blockchain. The use cases of Ethereum and Bitcoin are different. Bitcoin is a payment system and a currency. While bitcoin aims to disrupt PayPal and online banking, Ethereum has the goal of using a blockchain to replace internet third parties.

The Ethereum blockchain is maintained in the same way as the Bitcoin blockchain. The Ethereum network couldn’t work without miners. The mining machine is a powerful computer that picks up transactions from the mempool and places them to a new block. There are tens of thousands of miners in the Ethereum blockchain. They are rewarded from their work with new Ether-tokens. This traditional model is called Proof of Work. Ethereum is gradually moving from this traditional Proof of Work model to a modern Proof of Stake model. In this model traditional miners are replaced with validators. Validators “stake” the native network tokens by locking them into the blockchain to produce and approve blocks.

Ethereum and Bitcoin are completely different cryptocurrencies and they don’t compete for the same market shares. Above all, Ethereum and Bitcoin can be seen as cryptocurrencies which success supports each other.

Ethereum as an investment

Ethereum is one of the oldest and most popular cryptocurrencies on the market. Ethereum launched officially in the spring of 2015. Ethereum has grown a lot over the years. New and innovative applications are constantly being published in the Ethereum blockchain. Compared to other platforms, Ethereum has the most apps and developers. The popularity and use of Ethereum’s blockchain has been growing steadily in the recent years.

The popularity of Ethereum affects Ether’s course. The number and quality of applications in the Ethereum blockchain affects the value of the Ethereum ecosystem. The price of Ether will naturally react positively to the growing popularity of the Ethereum ecosystem. If Ethereum’s popularity declines in the future, this will also be reflected in Ether’s price.

Although Ethereum is by far the largest and the most popular ecosystem of cryptocurrencies, it has recently gained a number of competitors alongside it. However, compared to other ecosystems that have emerged in recent years, Ethereum has a clear advantage on its side. Like Bitcoin, Ethereum has also the first mover advantage. Ethereum has the most skilled developers and promising projects. For example, at the moment almost all decentralized finance (DeFi) applications are built into the Ethereum blockchain. Currently, Ethereum enables endless opportunities for developers.

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