What is Ethereum is a programmable and open-source blockchain launched on July 30, 2015, with its own native cryptocurrency: Ether (ETH). It is a decentralized digital currency. Much like Bitcoin, Ether is not controlled by any organization or government and can be used to store value, make payments, and provide collateral. When people generally refer to Ethereum, they are actually talking about Ether (ETH).
Launched in mid-2015 by
Why was Ethereum invented?
Currently, most of our digital data, including financial information and personally identifiable information like passwords, is stored on third-party servers owned by large conglomerates and companies like Google, Microsoft, Amazon and Facebook. This unprecedented centralization of data storage gives organizations and governments extraordinary power over citizens.
The main goals of Ethereum are to replace online banking services with a decentralized currency like Ether, as well as third-party service providers with privately-owned servers using blockchain technology. It is basically the basis of a new kind of Internet where everything is integrated, from data storage and payments to financial systems and service applications. Currently, thousands of developers are building apps using Ethereum, some of the most popular include:
Financial apps that let you invest, lend, or borrow your digital assets and currencies
Decentralized markets where you can trade digital goods
Games in which all in-game assets are in your possession and may even earn you real money
Cryptocurrency wallets that allow you to make instant and affordable payments with Ether or other currencies
How does Ethereum work and what is the underlying technology?
Ethereum is inspired by the Bitcoin blockchain, but it provides additional capacity for developers to create agreements and dApps with different ownership criteria, additional steps, new transaction formats, or many state transfer procedures.
It uses the Turing-complete programming language which allows developers to create applications in which transactions made on the blockchain can dictate and automate certain outcomes. This is why these applications are often called “intelligent contracts” ( Smart Contracts ).
Much like the Bitcoin blockchain, Ethereum is also a shared database that constitutes a complete transaction history, with each node connected to the network owning a copy of it. In addition to these transactions, the nodes also store the current state of each smart contract.
The network keeps track of the status of every smart contract or Ethereum app, including the balance each user has. When a transaction is made on the Ethereum blockchain, the platform follows the model of bank accounts. They appear in one wallet and can easily be transferred to another.
Ethereum’s cryptocurrency, Ether (ETH), is based on a token called ERC-20 which is one of the most widely used across the cryptocurrency sphere. The token is currently mined using the same proof of work protocol that Bitcoin uses.
However, due to the drawbacks of the protocol, like excessive power consumption, the Ethereum blockchain will soon update and implement ETH 2.0 which will move the Ethereum transaction validation protocol to evidence-based consensus stake.
There is no absolute answer to this question, Ethereum presents itself as an ideal candidate for decentralized finance. Individually, it is much more than an alternative digital currency. Not only does it aim to replace conventional online banking and third-party payment gateways, but it also strives to democratize the Internet through collective ownership of digital services and data storage.
A fundamental difference between Bitcoin and Ethereum is that the former wants to be a digital alternative to conventional currencies. Ether, however, is a token that exists to power integrated network services that include dApps, smart contracts, transactions, and Decentralized Autonomous Organizations (DAOs).
So, within the ERC-20 blockchain ecosystem, Ether is the most popular currency. It is also most often used in initial token offerings (ICOs). But in the most conventional sense, Ether is currently less well accepted as a currency than other cryptocurrencies like Bitcoin.
The average ethereum transaction fees are 0.4492 dollars per transaction an increase of almost 150% from last year (2019), where fees hovered around 0.17 dollar per transaction. . These costs are directly affected by network congestion or high demand for proof of work. In mid-2018, when cryptocurrencies were booming, Ethereum’s average transaction rate hit an all-time high and fees hit $ 3.
Apart from this, the expenses and fees charged by the various cryptocurrency services including trading platforms vary in percentage and structure. More often than not, standard bank transfer buying and selling will cost you between 0.5% and 2% of the sum, while instant purchase by debit card can cost you between 3% and 7%.
Likewise, there may be a fixed fee depending on whether you deposit or withdraw your funds through bank transfers. Pricing structures are not only very complex, but they vary considerably depending on many factors such as the payment method adopted and your location.
Ethereum offers all the advantages of a traditional blockchain, as well as some unique advantages of its own:
Every transaction that takes place on the Ethereum blockchain is immutable, which means that once the data is processed, confirmed, and written to the blockchain, it cannot be changed. This, therefore, makes the Ethereum network almost inviolable.
Ethereum currently uses a consensus mechanism to verify transactions, eliminating the need for a central authority or intermediary. Smart contracts based on Ethereum’s blockchain can even run automatically on their own.
Rather than going through manual checks and verification procedures, blockchain uses automated processes to ensure the validity of a transaction. This not only greatly speeds up transactions, but also makes them more affordable.
Ethereum has been around for over 5 years now and new applications are being created and running on the blockchain without facing obstacles like fraud, third party interference, censorship, and downtime. stop.
One of the main advantages of the Ethereum network is that it is programmable and developers can use it to build decentralized applications. It can be financial services, games, smart contracts, etc.
This is a tricky question because what is often mentioned on the internet as one of the main advantages of blockchain is the anonymity of users. While there is some truth to all of this, it has become increasingly difficult to maintain complete anonymity when using Ethereum or any other cryptocurrency that is not focused on respecting the privacy of its users. like Monero or Zcash).
The majority of reliable and well-established crypto-trading platforms require that you go through an intensive process of verifying your personal identity in order to reduce money laundering and other illegal activities.
On the other hand, despite all the anonymity protocols in place, you can still be tracked thanks to the digital fingerprint that you leave behind you, in particular, because it is impossible to modify or replace the data that has been written on the blockchain.
Even if you haven’t disclosed your name or other personal data, metadata and other contextual information can lead to your personal identity. This is why cash is still the most anonymous form of payment, even today.
Very. Each transaction that takes place on the Ethereum blockchain is secured by encryption and Ethereum has three times as many nodes to verify each of its transactions than the Bitcoin network for example. Most of the hacking attempts and cyberattacks associated with Ethereum target poorly crafted smart contracts by developers, rather than the blockchain itself. Now that the platform is moving to the proof of stake protocol, the blockchain will become even more secure.
Currently, the largest Ethereum blockchain project is ETH 2.0, which is led by Raul Jordan. It will make fundamental changes to the blockchain itself, including the move from the Proof of Work (PoW) protocol to the Proof of Stake (PoE) protocol. Including Raul’s team, there are a total of 8 teams working on different projects around the world to improve the Ethereum blockchain.
Led by Faisal Khan, the main goal of this team is to get businesses to use the Ethereum blockchain by developing powerful and compelling software that is more affordable, easier and more practical to adapt for different types of businesses.
ChainSafe is a Toronto-based research and development company that provides consulting services for Ethereum-based projects, such as Polymath, Aion, Shyft, and Bunz. It is headed by Mikerah Quintyne-Collins.
It is a blockchain infrastructure company that aims to keep the second most popular client, Parity Ethereum, on the blockchain. It is considered by many to be one of the most advanced and fastest Ethereum clients.
This team was funded by the Ethereum Foundation to create the full specification for the Ethereum 2.0 update. The team operates under the General Public License (GPL) to ensure that all code implementations remain free.
Using the Go programming language, this team created the first variant of Ethereum 2.0 and is currently providing the necessary help for the blockchain to acquire sustainable scalability (scalability). The team is led by Raul Jordan.
This is the current Ethereum client, based on Python, which includes six developers under contract with the Ethereum Foundation. The team is also working on setting up support for Ethereum 2.0 specifications.
This is another team that is funded by the Ethereum Foundation to develop a mobile browser and messaging platform to increase user engagement. The main goal is to ensure mass adoption by optimizing performance on less resource-intensive devices.
Funded by the Ethereum Foundation, Sigma Prime is an information technology and security consultancy that has been tasked with developing an Ethereum 2.0 client named Lighthouse.
Many financial institutions have rallied around Ethereum. A few years ago the Enterprise Ethereum Alliance was formed and included many tech giants and financial companies like ING, MasterCard, Credit Suisse, JP Morgan and many more.
Recently, Natixis Investment Managers, Clearstream, Credit Suisse and the Luxembourg Stock Exchange announced that they would fund a Series A funding round for an Ethereum-based start-up, FundsDLT.
The Ethereum mining procedure is quite similar to that of Bitcoin. There are blocks of transactions that require computing power to find the right solution. In technical terms, the block’s unique metadata is mined by miners using a hash function that returns a scrambled fixed-length string that looks random. When a miner finds a hash that matches the target, they are given the Ether token, and each node commits the transaction and updates the database. Once a miner finds the correct hash, all other miners start mining other blocks and so on.
An Ethereum wallet is software that is used to store Ether tokens. You can choose several according to your needs:
- MetaMask - Internet and mobile browser-based wallet
- TrustWallet - Mobile wallet
- MyCrypto - Online wallet
- Money - Mobile wallet
- MyEtherWallet - Client-side wallet
- Gnosis Safe - Multi-signature security-focused wallet
- Coinbase Wallet - Mobile wallet
If you’re looking for hardware wallets, the Ledger Nano S, KeepKey, and Trezor are good options.
Cryptocurrencies in general, including Ethereum, are prone to high volatility, making them high risk and high return investments. Prices can go up and down by 20-50% in a matter of hours, which can be both an opportunity and a risk.
That is why, if you want to invest in Ethereum, it is recommended that you do your due diligence and only invest what you can afford to lose. Considering the amount of work that has gone into creating Ethereum, it’s safe to say that this network (and its cryptocurrency) is here to stay.
In fact, many experts today believe that compared to Bitcoin, Ethereum is highly undervalued and has enormous potential for growth. However, when it comes to investing, there is never any guarantee.
1. Is Ethereum decentralized?
Yes. Ethereum is not owned by any large organization, financial institution, or government, which means it doesn’t have to deal with issues like censorship, fraud, and third-party interference.
2. What is a smart contract?
It’s basically a piece of code that works with the Ethereum blockchain and can run on its own if and when certain conditions are met. It is used to control digital goods, including ETH tokens.
Ethereum’s fees don’t stay the same - they go up and down based on multiple factors, including network demand. Currently, the fees range between $ 0.40 and $ 0.50.
Cryptocurrencies, including Ethereum, are very volatile and can be a high risk, high return investment. This is a decision you have to make on your own, but listen to what the experts are saying and only invest the money you don’t need and the losses of which won’t affect your life.
Decentralized applications or dApps are special applications written using the programmable blockchain offered by Ethereum. They include financial services, smart contracts, games, etc.
6. How can I mine Ethereum?
Ethereum can be mined using the computing resources of your devices through a proof of work protocol. However, it takes powerful computers to have any chance of getting the newly mined ETHs.
The best hardware wallets for securely storing your ETH include Trezor, KeepKey, and Ledger Nano S, while the Ethereum website recommends many internet and smartphone software wallets including MyEtherWallet.
The Ethereum is a virtual platform that adopts the decentralized exchange protocol establishes the bitcoin while developing its use in many other applications. Not to be confused with ether, the cryptocurrency at the base of the network, which is often referred to as ethereum.