Ethereum (ETH) review
If Bitcoin is the forefather of cryptocurrencies then Ethereum is 2nd generation evolution of cryptocurrencies. Ethereum is the birth and leader of a new era of smarter and more complex blockchain technology.
In this guide to Ethereum and ETH 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 talk you through how Ethereum works, the history and how the future looks like for the second biggest cryptocurrency project out there. Ethereum have truly changed this space forever, lets find out how…
Ethereum has been a real catalyst of change in the cryptocurrency space. It is the leading cryptocurrency that have 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.
Ethereum is like Bitcoin a Proof of Work based blockchain where miners mines new blocks and validates the transactions. Ethereum’s Virtual Machine (EVM) is a separate runtime environment where Ethereum’s smart contracts exist. It is 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 Application (DApps) with smart contracts enabled. This have 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 Ethereu, network. Often the two are used interchangeably. Ether is the digital currency element of the Ethereum network. It is essentially the fuel to pay for transactions 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 cryptocurrency, 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 of 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 Ethereum unique, but their other big reason for making it a leading blockchain tech is their decentralised applications platform (DApps). Ethereum made it possible (and easy) for people to quickly launch their own cryptocurrencies via the ERC-20 technology on the Ethereum blockchain. By creating their own ERC-20 tokens new crypto startups could get their cryptocurrency up and running on the Ethereum 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 Ethereum. 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. In ICOs everyday Joe’s like us can invest money into the ICO project and in return get tokens back matching our investment. 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.
After Ethereum many other’s have followed. And today there are a new set of blockchain projects that similarly like Ethereum makes it possible for other cryptocurrency startups to launch their own crypto projects on their platforms. Most well known blockchain platforms are, EOS, VeChain, Tron.
DAO and the famous hack and hard fork
in 2016 a new smart contracts model called DAO (Decentralised Autonomous Organisation) was created on Ethereum, 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 Ethereum miners agreed on a hard fork that created a new Ethereum cryptocurrency on the network. And thus two separate cryptocurrencies existed. With the new one being called Ethereum and the old one Ethereum Classic.
Can Ethereum scale?
One of the big concerns around Ethereum 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 Ethereum network was becoming very slow, and transactions price were running really high as a result. So what would happen when Ethereum was used for its high hopes and aims of global usage across new services and products?
Hence the big focus from the Ethereum 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 Ethereum 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 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 the Ethereum 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 hard core fans of Ethereum it’s just a question of when, not if Ethereum will be able to scale to handle future transaction needs. But in the meantime there are plenty of new exciting Ethereum copies and new blockchain projects running close behind, promising 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 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 (and Ethereum) 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 Ethereum playing a major part in the next coming years.
- It has a lot of upside to the brand, team and project in general. It is also have 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 have 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 Ethereum solves the scalability issues, then it is hard to imagine what will really stand in Ethereum’s way. It is already used. It have proved itself already. And it have strong backing from investors to developers. Where a lot of people are putting their time and money behind Ethereum to succeed. They won’t go away without a fight.
Final thoughts about Ethereum
We hope that by the end of this guide / review you will have a good understanding about Ethereum and its currency Ether. How Ethereum came about and the role it has currently played to further all cryptocurrency and blockchain projects. No one can tell for sure what role Ethereum 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 Ethereum could really be 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