Ethereum, the world’s second most valuable cryptocurrency, has recently completed a major software upgrade, the Merge, giving way to Ethereum 2.0, an improved version of the blockchain that deploys a proof-of-stake system to confirm transactions and create new blocks. With 99.95% fewer carbon emissions per transaction, in all likelihood staking will attract more institutional investors into ETH, the native token used by the Ethereum blockchain, and drive enterprise adoption. One can buy Ethereum (ETH) straightforwardly on top platforms like Binance, which enable the exchange of fiat currency for digital currency. Before cryptocurrency exchanges, the only way to acquire tokens was through mining and or by organizing transactions on forums, both online and offline.
If you wish to learn more about Ethereum, please continue reading.
What Is Ethereum?
Ethereum is a blockchain-based computing platform with a native coin, Ether, that functions as an acceptable form of payment for transaction fees and is required to validate and propose blocks on the Mainnet. The Ethereum blockchain makes it easier to develop applications that require information to be stored securely; the division of permanent and temporary data guarantees that data is safe and easily manageable. The blockchain is made up of three tries, namely:
- State Trie: All the information about accounts is stored in the state trie of Ethereum, which gets updated constantly.
- Storage Trie: This is where smart contract data is stored. Every account that has a smart contract has a storage trie.
- Transaction Trie: Transactions in the blocks are organized into a tree structure; the root hash is saved in the header. You can use this trie to identify specific transactions.
Tries are cryptographically secure, and each node is acknowledged by its hash. A tree has no key collisions, yet there might be in hash tables. The best way to describe Ethereum is as a decentralized computer where no single entity is the sole authority. Every address represents an account comprising a balance, which owns a certain number of Wei, Ether’s sub-unit.
Who Is the Founder of Ethereum?
The idea of Ethereum belongs to Vitalik Buterin, a Russian-Canadian computer programmer who became involved in the cryptocurrency community from the very get-go. Additional founders of Ethereum include Charles Hoskinson, Gavin Wood, Anthony Di Loria, Miha Alisie, Amir Chetrit, and Joseph Lubin. They decided to leave the company because they disagreed with the direction it was taking. In November 2013, Buterin launched the “Ultimate Scripting” project and introduced Ethereum through a whitepaper, which is a guide to understanding Ethereum for people without an advanced degree in computer science. At the time of the publication of the whitepaper, Buterin didn’t have a solid programming language.
Ethereum Features & Real-World Applications
Ethereum derives its one-of-a-kind features from blockchain technology. These are Ethereum’s essential features:
- Smart Contracts: Ethereum enables the development and deployment of smart contracts, and automated agreements between creators and recipients. The terms are stored in the distributed database, so they can’t be altered. A user initiates a smart contract from the blockchain wallet, which arrives at the distributed database, where the identity is confirmed. The transaction is added as a block within the blockchain. Any change in the contract status follows the same process.
- Ethereum Virtual Machine: The EVM is part of Ethereum that runs execution and smart contracts. Smart contracts can be utilized on EVM-compatible chains such as Polygon or Avalanche to be recognized by Ethereum nodes. Simply put, EVM works like a master computer to complete various tasks on the blockchain. It has access to all network nodes, and it’s one of the most potent virtual machines ever.
- Decentralized Applications: A decentralized application is composed of a smart contract and a user interface (an on-screen dashboard). It’s designed to be transparent, so the data and transaction records are available online. Ether is the go-to currency for dApps, so you can use a familiar token to interact with the blockchain. Practical uses of dApps include but aren’t limited to financial services, identity verification, and predictive analysis, to name but a few.
The Ethereum blockchain isn’t limited to supporting tokens, so its primary purpose isn’t to establish itself as an alternative to the monetary system. It aims to store computer code, allowing participants to interact with one another without a trusted authority. Top uses include but aren’t limited to decentralized finance, tracking credentials, streamlining the process of buying and selling property, art collecting, and insurance settlements. This list isn’t exhaustive by any means. As far as Ethereum use cases are concerned, the sky’s the limit.
Ethereum Vs Bitcoin: What’s the Difference?
Bitcoin was the first cryptocurrency ever to be created and is largely regarded as digital gold to explain its scarcity and potential as a store of value. If Bitcoin is digital gold, Ethereum is digital silver, offering more real use cases in day-to-day life. It’s not just a virtual currency. Ethereum is the first altcoin to challenge Bitcoin, and many argue that it has the potential to become the dominant digital asset. It can be used as the underlying software for everything from decentralized finance to play-to-earn games using non-fungible tokens. Proof-of-stake is the consensus mechanism used for Ethereum, so there’s better scalability because no physical machines or mining farms are required.
While different blockchains have block limits, Ethereum doesn’t. Instead, Ethereum has a gas limit, which is presently at 30.000M. It’s the maximum amount of work estimated a validator will do on a specific transaction. There’s no denying the fact that there are significant differences between Ethereum and Bitcoin, but it’s important to understand that they complement one another, as they serve different purposes. By way of exemplification, Ethereum can be used to interact with applications on the blockchain, while Bitcoin serves as a store of value. The point is that the two can successfully coexist; one isn’t better than the other.
Closing Thoughts
For Ethereum to become the go-to network for all decentralized applications, it must allow multiple transactions to happen at once. At present, Ethereum can process about 30 transactions per second, but it’s expected it will reach 100.000 transactions per second. At any rate, it has a long way to go.