What is Ethereum?
Ethereum is a public open source decentralized blockchain-based computing platform and operating system featuring smart contract functionality. Ethereum provides a platform that runs smart contracts written in Turing complete programming language. Ether is its official token, which is a coin that allows programs to run on the Ethereum network. It also gives users on the network rights to vote.
Ethereum was launched by a cryptocurrency researcher and programmer named “Vitalik Buterin”. It was funded by an online crowdsale which took place between July and August 2014. It was finally launched to the public on July 30th, 2015.
With the help of its virtual machine, scripts are executed using an international network of public nodes. The network also uses an internal pricing mechanism called “gas” to lessen spam and allocate resources to the network.
Main features of Ethereum
- Ethereum as a cryptocurrency has so many features, some of these features include its various platforms and applications that it has adopted over the years. Some of these features are:
- Smart contracts: this has been referred to as a phrase that seeks to explain a computer code that enhances the transfer and exchange of money, contents, properties, shares or anything of value. On the Ethereum network, smart contracts are compiled down to the Ethereum Virtual Machine (EVM) bytecode which ensures that they are deployed to the blockchain for execution. To understand how smart contracts work, we will see it as a self-operating machine that executes or validates transactions when certain necessary conditions are met.
- Ethereum Virtual Machine: before the launch of Ethereum, most cryptocurrency blockchains were designed to carry out limited functions. They were left with the option of either using the functions offered by Bitcoin’s blockchain or build a new platform entirely. Ethereum, on the other hand, built its own blockchain application which is called the Ethereum Virtual Machine (EVM). This machine is a Turing complete software that runs on the Ethereum network. Given enough time and memory, EVM allows users to run any program regardless of the programming language.
- EVM has proven to be a major milestone in the cryptocurrency world. The process of creating blockchains have been made easier by the application. Ethereum supports the creation of new applications on blockchains, this solves the problem of creating a new blockchain for every new application to be created
- Gas: this is an internal mechanism that is used for pricing transactions on the network. It is also used to reduce spam and allocate resources on the Ethereum network. NEO also uses gas, but it is a separate coin.
- All smart contracts on Ethereum are stored publicly on every node of the platform. Also, there is a low-speed in processing transactions because every node on the network calculates smart contracts in real-time.
- Ethereum’s decentralized applications (DApps) which are based on the EVM have been used for different functions. Internet of things, electricity sourcing, and pricing, farm to table produce etc are some of the ways this application have been used.
- As at 2017, Ethereum became the leading blockchain platform for projects that have to do with Initial Coin Offerings (ICO). Some popular coins that are built on ethereum are EOS, TRON, and Aeternity.
Difference between Ethereum and other cryptocurrencies
- One major difference between Ethereum and other cryptocurrencies is the ability its blockchain has to process codes. Rather than limit the functions of blockchains, Ethereum has created a machine that allows developers to create whatever application they desire on it. This clearly means that developers have the support to build thousands of applications on this platform.
- Ethereum uses accounts and balance in a manner called state transactions.
- Used to build decentralized organizations. While most cryptocurrencies deal with the exchange and transfer of tokens from one user to the other, Ethereum specifically focuses on ensuring that all centralized organizations can be decentralized. This means that all rules, hierarchical structures will be eliminated from the organization.
- Ethereum tokens are used to own decentralized autonomous organization. They are not symbols of equity, rather they are contributions that give people the right to vote on the Ethereum network.
What can Ethereum be used for?
This question has been asked by people, Ethereum can be used to build and deploy decentralized applications. All services that are centralized can be decentralized by Ethereum. Ethereum can be used to build decentralized autonomous applications. What this means is that Ethereum can build organizations with no leader. They are run by programming code on a written collection of Ethereum Virtual Machine smart contracts. The programming code is used to replace any rule or structure of a traditional organization.
Ethereum Pros and Cons
- It is immutable. This means that no third-party can make changes to the already existing data.
- Since all applications are formed based on a network formed around the principle of consensus. This makes the network corruption and tamper proof.
- With the help of a mechanism called “cryptography”, all applications on the network are protected against hacking and fraudulent activities.
- Ethereum network ensures that no application can go down or be switched off.
- Transaction fees on the network are as low as $0.33.
- Since most applications and projects are built on Ethereum’s machine this makes it the best long-term potential cryptocurrency.
- Ethereum allows for limitless blockchain functions.
- Ethereum is specifically designed to use programming codes to ensure that all centralized organizations can become decentralized.
- Working on implementing plasma which will dramatically increase TPS. OmiseGO is also going to implement plasma.
- Since programming codes are written by humans, there will always be errors.
- It processes only 25 transactions per second. This is low compared to the number of transactions other cryptocurrencies process in a second. Once plasma is in place, expect this con to go away.