Ethereum (ETH) review
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If Bitcoin is the forefather of cryptocurrencies then Ethereum is 2nd generation evolution of cryptocurrencies. It is considered by many to be the birth and leader of a new era of smarter and more complex blockchain technology.
In this guide you will learn:
- Ethereum is the foundation for a new era of the internet
- This is how Ethereum works
- Ether – the currency running on the Ethereum network
- Smart contract tech is the future of crypto!
- Benefits of Ethereum
- Why ETH (Ether) is worth investing in
In this review, we will walk you through how this new exciting smarter blockchain works. The history behind it, and how the future could look like for the second-biggest cryptocurrency project out there.
Ethereum has truly changed this space forever, let’s find out how…
It has been considered by many to be a real catalyst for change in the cryptocurrency space. It is the leading cryptocurrency that has made smart contracts available via blockchain technology. With smart contracts, a whole new world of services and products are able to exist on the blockchain. This is how this new internet and blockchain could be imagined (from www.ethereum.org):
- An internet where money and payments are built-in.
- An internet where users can own their data and your apps don’t spy and steal from you.
- An internet where everyone has access to an open financial system.
- An internet built on neutral, open-access infrastructure, controlled by no company or person.
Like Bitcoin, it runs on a Proof of Work-based model, where miners mine new blocks and validate the transactions.
Ethereum’s Virtual Machine (EVM) is a separate runtime environment where its smart contracts exist.
It is a quasi-Turing complete software that allows people across the peer to peer network to write new scripts across a distributed network of computers that enables all the creation of those great new Decentralised Applications (DApps) with smart contracts enabled.
This has made it possible for developers to quickly take advantage of this new technology.
Ether is the currency used for executing the smart contracts and what we transact with each other on the network.
Often the two are used interchangeably. Ether is the digital currency element of the blockchain. It is essentially the fuel to pay for transaction executions, which enables all the smart contracts and decentralised applications to function.
Every execution on the network utilises fuel, also known as gas which is paid for by the sender and it is paid to the miners of the network as a reward for mining new transactions. So with more features and complexity
Ethereum, as mentioned, is the leading blockchain, and the real birth of smart contracts enabling a huge range of different use cases. So what are smart contracts?
Quickly explained as added smart rules or conditions that when get triggered opens up for a whole range of different functionalities. Sort of if this, then that rules.
And this combined with smart applications is where the real magic comes to life. With smart contracts, people can buy products and services from each other or from brands directly from the internet without the need for a middleman.
Examples of smart contracts use cases could be:
- Buy and sell homes via smart real estate applications, it could be a decentralised Airbnb service or your local real estate agency
- Automobile services, anything from renting a car and paying for the exact mileage/time used or fuel usage where only you and the car interact with each other.
- Smart healthcare applications where records and files between patients and medical staff could easily be shared in the agreed-upon scenarios or insurance information could be shared with trusted parties when necessary
The mother of pretty much all current cryptocurrencies?
Not only are smart contracts a huge part of what makes this new leading blockchain unique, but their other big reason for making it a leading blockchain tech is their decentralised applications platform (DApps).
Vitalik and the team made it possible (and easy) for people to quickly launch their own cryptocurrencies via the ERC-20 technology on its blockchain.
By creating their own ERC-20 tokens new crypto startups could get their cryptocurrency up and running on its blockchain in almost no time. Potentially with the goal in mind in one day move onto their own blockchain.
So during the highs of 2017, we saw the birth of hundreds of new cryptocurrencies launched via ICOs created on the blockchain.
ICOs is the name of a new type of funding for crypto startups to get the capital needed to build their new service or product.
With ICOs everyday Joe’s like you and me can invest our money into the ICO project and in return get tokens back matching our investment. Hoping to see that future prices would increase when the token enters the market.
So today there are hundreds of new cryptocurrencies, or altcoins out there created on Ethereum. Where the first-ever cryptocurrency created was Augur, a decentralised prediction application. Which could be used for anything like betting, trading or forecasting examples.
DAO and the famous hack and hard fork
in 2016 a new smart contracts model called DAO (Decentralised Autonomous Organisation) was created on the blockchain, with the aim of creating a new type of business model for the funding of both commercial and non-profit enterprises on the blockchain.
And later one of the first new organisations called The DAO was launched, with the backing of $150 million in crowdfunding in June 2016.
But they were almost immediately hacked and over $50 USD millions were stolen in cryptocurrencies. And to counter this huge theft and scandal the miners agreed on a hard fork that created a new Ether cryptocurrency on the network.
And thus two separate cryptocurrencies existed. With the new one being called Ethereum and the old one Ethereum Classic.
Can it scale?
One of the big concerns around the Ethereum blockchain and other blockchain projects have been revolving around their capability to scale to mass adoption and the usage that would follow.
Both during the ICO heights of 2017 and the CryptoKitties time the network was becoming very slow, and transactions price were running really high as a result.
So what will happen when Ethereum is going to be used for all those services like a decentralised Uber, Airbnb, etc? If CryptoKitties can crash the network then how can it handle real-life mass adoption?
As it currently stands, it can’t. Therefore the team with their huge team of developers is working hard daily to get the blockchain to a position where it can handle those types of volumes.
Hence the big focus from the core developer team in the past years has been around solving the questions around scalability. And many potential methods have been researched and looked into.
Examples of those have been Plasma, Serenity, and Casper. Which includes a new type of blockchain which will be Proof of Stake based rather than Proof of Work. It will be adding sharding technology and a new virtual machine (eWASM).
Sharding basically means splitting up the main chain’s large set of information into a separate smaller set of chains. Where the current state and historical data are split into smaller shards.
And then with Plasma, we have basically a separate blockchain on top of the blockchain, and a new scalable and autonomous framework mainly used for financial systems. Examples of services that aim to run on Plasma is OmiseGO.
If you ask hardcore fans of Ethereum it’s just a question of when not if it will be able to scale to handle future transaction needs.
But in the meantime, there are plenty of new exciting smart blockchain copies and new blockchain projects running close behind. Promising to have their own answers to the topic of scalability for blockchains.
The topic is hot for the entire cryptocurrency space, including Bitcoin and many other projects too.
- The enabling of smart contract applications and services to be able to operate and practically exist on their own – by being self-executed
- Immutability is, of course, a huge factor as to why blockchain applications are being considered truly revolutionary. Where transparency and openness are core elements
- Fast and shared decentralisation allows anyone to take advantage of new business models, applications and communities, all without the control of centralised governments or organisations
- Like with Bitcoin, a first-mover advantage. It is still the second most valued digital currency. Ether is the second most well-known cryptocurrency and crypto brand. It also has the biggest team of active developers (4352 active monthly developers). So it’s hard to imagine a future without it playing a major part in the next coming years.
- It has a lot of upside to the brand, team, and project in general. It also has a strong belief that smart contract technology is the future of blockchain and cryptocurrencies.
- If the last crypto bubble showed us anything is that ETH has faith and belief from the whole crypto community. From individual investors to investment companies, to financial and tech companies and media. So when the next bull run comes, a lot of focus and money will be flowing into ETH again.
- If they solve the scalability issues, then it is hard to imagine what will really stand in its way. It is already used. It has proved itself already. And it has strong backing from investors to developers. They have the biggest team of developers in the business, by far. They won’t go away without a fight.
We hope that by the end of this guide/review you will have a good understanding of Ethereum and its currency Ether.
How it came about and the role it has currently played to further all cryptocurrency and blockchain projects. No one can tell for sure what role it will play in the future, but we’d like to reiterate our belief that it will continue to play a major part.
If they will prove themselves and handle mass adoption through scaling we have to wait and see. In that future, it has great potential to be a dominant force in this space. But competition is healthy, so the future success of Cardano, VeChain, EOS, and others will surely only be positive for this emerging space.
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Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that wants to see better and smarter products and services that makes our lives better and easier