If you’re a person who’s not so well-versed in the field of cryptocurrencies, you might only know about Bitcoin and nothing else. It’s predicted to be the future of money, breaking the barriers to financial services and blockchain technology. Years after it was invented, lots of popular and lesser-known altcoins popped up in the market, and this includes Ethereum. So, you might wonder, what does it exactly want to achieve? How does it differ from Bitcoin and how would it revolutionize financial markets in the future?
It’s easy to assume that it’s competing with Bitcoin, given that it ranks second next to it. However, this digital asset has different technology and goals, along with features that make it a unique investment for many users.
Curious to know more about Ethereum? Continue reading the rest of the article below at Casino Days India!
What is Ethereum?
Known to be a decentralised blockchain platform, Ethereum offers a peer-to-peer network operating on smart contracts. They let users within the platform process transactions without middlemen or third parties through its native token called ETH. It allows them to access full transparency and ownership since transactions are fixed and can be verified.
Ethereum is also focused beyond the prospect of revolutionizing the world of finance. In the platform, users are allowed to build decentralised apps, also known as dApps, using Solidity and the Ethereum Virtual Machine. The apps are usually used for gaming, social media and even for hospital record management.
How it started
In 2013, Russian-Canadian programmer Vitalik Buterin published a whitepaper containing the Ethereum concept to address what Bitcoin lacks. In the document, he aimed to reach the full potential of blockchain technology through the development of dApps. During that time, decentralised apps already existed but they lacked one important feature: interoperability.
With the creation of Ethereum, dApps started to unify. However, its invention needed funding, prompting Buterin and his co-founders including Gavin Wood, Mihai Alisie and Amir Chetrit to raise US$18,439,086 in Ethereum price through a presale.
In 2015, Buterin, along with Joe Lubin—the founder of ConsenSys, officially launched the Ethereum platform to the public. As time went by, more developers jumped into the Ethereum craze, eventually giving birth to the Decentralized Autonomous Organization (DAO) in 2016. The group proposed network changes without the need for a middleman, using the majority of votes to decide on a certain proposal.
However, an incident involving a hacker stealing US$40,000,000 from DAO’s funds, urged the group to execute a hard fork within the network to reverse the theft. Consequently, Ethereum underwent a major change that led them to implement a new set of protocols.
Ethereum key features you should know
To understand how Ethereum differs from other digital currencies like Bitcoin, Dogecoin and Litecoin, here are its key features you need to know:
There’s no doubt that you are supervised by a central authority when you use social media platforms. You can’t just post a picture of your cute pets without the permission of Twitter, Facebook or Instagram. As a user, you are bound to follow the rules or else you run the risk of being banned if you violate any of the regulations.
However, using Ethereum is entirely different from traditional platforms.
The structure of Ethereum is designed to welcome the benefits of smart contracts. They are considered tools that can process transaction data without depending on higher entities, for as long as certain conditions are met. Users can execute transactions involving properties, shares and other cryptocurrencies they plan to trade through a contract. It should state the terms and conditions both parties have agreed upon.
Thanks to the Ethereum platform, dApps are now on their way to mainstream adoption. Since they are open-source networks that run on smart contracts, all changes must be decided by the users’ votes. The codebase will be accessible to the participants, allowing them to evaluate protocols that need to be implemented.
Although they use the same front-end code that traditional apps use, their back-end codes are what make them different. This allows decentralised apps to run without the control of a single authority, unlike YouTube and other mainstream websites on the Internet.
One of the most popular dApps in the market recently is Axie Infinity, an NFT-based online video game launched by Sky Mavis. The program uses a currency called the ERC-20 token that lets users interact with other participants. It also allows you to trade Axies, which are little monsters that can be upgraded and used to fight other players for rewards.
Disadvantages of Ethereum: What needs to be addressed
Ethereum is undeniably one of the best digital assets in the market, with its advancements in blockchain technology and P2P networks. However, the platform still encounters a few key issues, which include the following:
Since Ethereum does not only focus on financial transactions like other popular assets, it’s bound to encounter scalability issues. It serves as the platform for decentralised apps, smart contracts and ledgers, which led to slow validation times, hacks and breakdowns.
Pricey transaction fees
One of the main reasons why Ethereum still hasn’t reached widespread adoption is because of its high transaction fees. If you plan to use the platform, you might have to invest hundreds of dollars worth of ETH, which discourages new users from exploring the network.
Ethereum: What the future holds
With the rise of NFTs and decentralised apps like TraderJoe and Uniswap, the Ethereum blockchain has gotten more popular in the crypto industry. This led to positive effects on the network, which encouraged crypto investors to embrace the full potential of blockchain that does not only revolve around finances.
Although Ethereum still has problems since it’s a novel technology, its future remains bright as it improves its services and features for users. Its open-source nature will also allow more developers to build their applications and projects which can give birth to new protocols.