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3 Quick Points to Simplify Ethereum
Gain a better understanding of the decentralized open-source blockchain platform
Ethereum is a decentralized open-source blockchain platform. It was first described in a 2013 whitepaper by Vitalik Buterin, its main co-founder. Buterin and his other co-founders secured funding for the project in 2014 and launched the blockchain on July 30th, 2015.
Ethereum’s main goal is to become a global platform for decentralized applications, which it has over the past six years. Ethereum has the most active blockchain. Its cryptocurrency Ether has the second highest market cap of any cryptocurrency after Bitcoin.
The following three points will help to simplify Ethereum further:
1. Decentralized Applications
2. Uniqueness
3. Security
1. Decentralized Applications
As stated earlier, Ethereum has become a global platform for decentralized applications. What is a decentralized application? It is an application that is outside of the control of a single authority. The users of a decentralized application decide on its rules, making it resistant to censorship, downtime, and fraud. Examples of decentralized applications that have been built on Ethereum are OpenSea (an NFT marketplace), Uniswap (an automated token exchange), Decentraland (a virtual reality platform), and Minds (a censorship-resistant social network). You can find a list of 100+ Ethereum-based decentralized applications by visiting Consensys.
2. Uniqueness
One of the key items that make Ethereum unique from many other blockchain platforms is smart contracts. What is a smart contract? A smart contract is a computer program that automatically executes actions necessary to fulfill an agreement between multiple parties. Essentially, smart contracts are what the decentralized applications of Ethereum run on, removing the need for an intermediary or single authority to fulfill agreements.
Ethereum’s blockchain is also about to host other cryptocurrencies, called tokens, using its ERC-20 compatibility. There are more than 280,000 ERC-20 compliant tokens. Some of the larger ones by market cap are Tether, Uniswap, and Chainlink.
3. Security
As of August 2020, Ethereum’s blockchain is secured via the ETHash proof-of-work algorithm. One of the key issues with ETHash is that it is memory intensive, requiring a lot of computer power. The Ethereum blockchain is in the works of being transitioned to a proof-of-stake algorithm tied to the major Ethereum 2.0 update, which launched in late 2020. With the Ethereum 2.0 update, the blockchain will become more scalable (decentralized applications will run faster and transaction fees will be less), more secure (greater protection against attacks), and more sustainable (less computer power consumption) by the end of 2022.
Ethereum is not going anywhere anytime soon. As of 5 PM EST on May 19th, 2021, Ether is at $2,547.10. Over the past year, it has increased by over 1,000%. A market research firm believes that it will reach $10,000 before the end of this year. Will that happen? We will have to wait in see. The key thing here is that in gaining a better understanding of Ethereum, you can see why it is a platform that you should be aware of.
