Ethereum is a blockchain platform that has its own cryptocurrency, Ether (ETH), or Ethereum, as well as its own programming language, Solidity. Ethereum, a blockchain network, is a decentralized public record that records transactions and verifies them. Users can publish, monetize and use applications on the network. They can also use Ether cryptocurrency to pay for their transactions. Insiders refer to the decentralized applications of the network as “dApps.”
Ethereum Facts
- Ethereum is an open-source, blockchain-based platform that creates, shares, and distributes business, financial, and entertainment applications. dApps are available for a fee. Gas is the name given to these fees because they are dependent on the computational power required.
- Ethereum has its own cryptocurrency, Ether or ETH.
- Its cryptocurrency is now second in market value to Bitcoin.
Understanding Ethereum
Ethereum was created to allow developers to create and publish smart contracts and distributed apps (dApps) without any downtime, fraud or interference from a 3rd party.
Ethereum is described as “the world’s first programmable blockchain”. It is a programmable network that acts as a marketplace for financial, gaming, and app services. All of these can be paid in Ether cryptocurrency and are protected from fraud, theft and censorship.
Ethereum’s founders
A small group of blockchain enthusiasts launched Ethereum in July 2015. Joe Lubin, the founder of ConsenSys (a blockchain application developer that uses Ethereum network), was one of them. Vitalik Buterin is another co-founder. He serves as the company’s CEO and public face. Buterin is often referred to as the youngest crypto billionaire in the world. (He was born in 1994.
The Ether cryptocurrency was created to be used within Ethereum. Ether, like Bitcoin is now accepted as a form of payment by some merchants or service providers. Ether can be used to pay for online purchases such as Overstock, Shopify, CheapAir, and Shopify.
The Ethereum Business
Gartner Research has identified Ethereum as the main competitor for businesses looking to invest in a blockchain platform. These include Ripple and IBM, IOTA Microsoft, Blockstream, JP Morgan and NEO.
Separately, Ether is a contender on the volatile cryptocurrency market. Ethereum was the second-largest cryptocurrency in terms of value as of May 2021. Analytics Insight estimated that Ethereum’s market cap was $500 billion, compared to Bitcoin’s $1.080 trillion.
Ethereum-Based Projects
Ethereum claims that its platform can be used “codify. decentralize. secure. and trade just about everything.” Several projects are currently underway to test the concept.
ConsenSys and Microsoft have partnered to offer Ethereum Blockchain as a Service on the Microsoft Azure cloud. It will offer developers and enterprise clients a cloud-based, blockchain-based environment.
ConsenSys and Advanced Micro Devices (AMD), announced a joint venture in 2020 to create a network data centers based on the Ethereum infrastructure.
Continuing Evolution
The founders and leaders of Ethereum were among the first people to realize the potential of blockchain technology beyond secure trading of virtual currencies. Its ETH cryptocurrency was initially created to pay for apps built on its platform.
Its invulnerability against hackers and other snoopers has allowed for storage of private information, from voting systems to healthcare records. Programmers have the opportunity to market and create games and business apps on the network because of its dependence on cryptocurrency.
The Hard Fork
Although a blockchain is invulnerable to hacker attack, it’s not without effort. A malicious actor stole more that $50 million of Ether in 2016 to fund a project called The DAO. This was a set smart contracts created by a third-party and originating from Ethereum’s platform. A third-party developer was responsible for the successful raid.
The Ethereum community decided to reverse the theft by creating “hard forks”, invalidating the existing blockchain, and creating a new Ethereum blockchain. The original is known by Ethereum Classic.
Ethereum 2.0
Ethereum was second in virtual currency market share, after Bitcoin, as of May 2021. In 2018, the number of ETHs in circulation surpassed 100 million.
There is no limit on the number of ETHs you can create, unlike Bitcoin.
The long-awaited upgrade to Ethereum 2.0 is underway. It is designed to allow the network’s capacity to grow while also addressing congestion issues that have hindered it in the past. (In 2017, CryptoKitties, a single-handedly slowing down transactions on the platform, was introduced.
Ethereum has bigger ambitions than Bitcoin. It wants to be a platform that can store information securely in all types of applications.
Criticisms of Ethereum
Ethereum is subject to the same criticisms as all other cryptocurrency platforms:
- All cryptocurrencies, including Ether have prices that mirror bitcoin’s price action. This trend has been evident for many years and is still prominent today. In 2017, bitcoin’s value fluctuated between $900 and $20,000. In April 2021 bitcoin’s value soared between $900 and $20,000. It was at its highest point of about $63k in April 2017. It hovered around $30k in July 2021. As such, cryptocurrency remains highly speculative and is subject to both bullish or bearish periods. Particularly, cryptocurrency miners are dedicating a lot of computing power to validating transactions.
- Each one of these networks consumes a lot of energy. China is taking steps to curb cryptocurrency mining.
The fees charged by Ethereum have also been criticized. This could change with the release of Ethereum 2.0.