Ethereum – a new Internet revolution?

Ethereum

Ethereum

In a world of today, technological advancements are happening on a daily basis. Founding of blockchain created a whole new and exciting market, as well as an option for simplifying various, often laborious procedures. Although there are many cryptocurrencies on the market, some of them really do stand out thanks to the uniqueness of their proposals, as well as the quality of their product. One of these is surely Ethereum, which provides a solution for creating custom-made applications on a fully decentralized development platform by utilizing its own programming language, Solidity. Although some other cryptos offer very similar services, thanks to its quality and high usability by new emerging blockchain companies, it’s no wonder that Ethereum is a true market leader here. In fact, in terms of total market value, it is positioned in the second place, right after Bitcoin. Is that a solid guarantee of an investment? Read our detailed analysis before you hop on a crypto train!

Ethereum | Main concept

In order to explain how Ethereum works and what it actually does, we’ll give a brief overview of blockchain basics. Fundamentally, blockchain denotes a distributed database secured with cryptography, spread around computing machines called nodes and containing an ever-growing list of records in a chronological order. Basically, since every node contains exactly the same copy of a database, which is updated in real-time by adding new blocks to the chain, there is not a single point of failure as with common databases. Nodes, apart from containing copies of blockchain and ensuring the network security, are also responsible for generating new blocks, by finding a solution to mathematical puzzles. Bitcoin blockchain, for example, contains information of every transaction executed since its inception. Ethereum blockchain, on the other hand, broadens it by adding snippets of code to all block entries, which are called smart contracts.

Smart contracts are specific chunks of code, called scripts that are designed to be executed when the specific condition is met. Their purpose is to give everyone the ability to design custom contracts that will be executed without the need for a third-party institution that validates if the contract truly gets executed. The magic of smart contracts is that they can contain virtually anything, thus enabling the creation of various applications. The platform utilizes the computing power of all nodes to perform smart contract execution, which happens at the same time on every node. This way, a kind of online supercomputer is formed, intended to continuously execute thousands of smart contracts using something called Ethereum Virtual Machine or EVM. It is a framework for smart contract execution that is completely decentralized since same processes are happening on all nodes simultaneously. It supports applications written in many prominent programming languages, including C++, Java, JavaScript, Python, Ruby and many more. The system is powered by fees paid in Ethereum’s currency token called ether, which can be traded on every major cryptocurrency exchange platform. In other words, developers that are creating decentralized applications are paying computational fees with ether in order to have their apps executed by nodes.

This is the basic functionality of this ingenious platform. However, its main selling point also has its weaknesses and advantages. We’ll be discussing a bit more about them in the next section of this article, so keep on reading!

Ethereum | Pros and Cons

As a completely groundbreaking service, Ethereum has many good sides. Decentralized nature ensures that all applications and smart contracts will continue working despite the number of active network nodes, unlike classic applications that are tied to the single server device. Furthermore, since the application code places on the blockchain is immutable and open-source, all contracts are destined to be executed without the possible interruption of any government or organization. This makes smart contracts more secure and trustworthy than the classic agreements between parties. Also, due to the fact that a variety of supported programming languages enable the creation of various contracts, the innovation possibilities are virtually infinite. And finally, combining multiple smart contracts together gives you the option to create more complex ecosystems called decentralized autonomous organizations or DAOs, which have seen instant success in the financial industry.

However, we should mention some downsides of this platform as well, which are mainly in existence due to some potential problems in blockchain design. Although Ethereum blockchain is considered as one of the fastest ones in existence, due to its decentralization and the fact that all nodes have to be synced with each confirmation, it is still inferior to classic transaction methods. For instance, Ethereum’s daily processing power is outmatched by the Visa’s in a matter of minutes. Also, blockchain nodes require electric power to run, thus creating significant costs to their owners. These costs are often compensated by selling ether tokens for fiat currencies, thus reducing the total value of the token. On the other hand, an issue concerning the fact that the code of all applications is visible on the blockchain is that hackers can discover and take advantage of potential bugs before the community discovers it. This raised a concern for developing advanced code verification tools, an issue that is being solved by Microsoft among others. As you can see, Ethereum platform has both good and bad sides, but its future is nothing but certain thanks to vast usage possibilities. Keep on reading and see what has been made on the platform so far!

Ethereum | Achievements

Being the first and most used decentralized development framework that anyone can use freely, Ethereum saw a huge recognition after the boom of ICOs. The majority of ICOs are being developed on this very platform, and through crowdfunding, these companies are receiving significant amounts of funds. This brings to the creation of wholly new applications built on top of the Ethereum blockchain. Also, linking a series of smart contracts together and creating DAOs gives even further possibilities to the platform. For instance, most prominent cryptos that were created with this interface include OmiseGo, EOS, Qtum, Golem, Civic, BAT and many more, with hundreds of more to come. They are offering a wide variety of services, from currency exchange, prediction markets, social platforms, casinos, decentralized browsers to electricity management, marketplaces and much more. Also, through the association called Enterprise Ethereum Alliance, many prominent companies are joined together in order to develop enterprise solutions based on this blockchains. The list of members is huge and includes names such as Microsoft, Intel, Santader, Deloitte, JPMorgan, Thomson Reuters and many more, thus ensuring a bright future for this company. Finally, a change from proof-of-work to the proof-of-stake system is proposed by the upcoming fork of the core software, aiming for a more resource-friendly ecosystem. Now, before we wrap up this article, let’s see how you can obtain these tokens!

Ethereum | Buying and keeping tokens

Due to the fact that we’re talking about the second strongest cryptocurrency in the world, it can be obtained on virtually any exchange. We have been writing about the trading on the exchanges earlier before, so we’ll just sum it up to this – create an account, verify it, secure it, link it to your bank account, make a deposit and start trading. After getting your tokens (currently priced a bit over 300$ per coin, but you can always buy a smaller portion if you want to), you can either leave it on the exchange or put them on a wallet. Unlike exchange wallets, stand-alone software wallets put you in charge of your private keys, gives you additional transaction options, backup possibility and much more. Ethereum is supported on prominent hardware wallets such as Ledger Nano or Trezor, desktop wallets such as Mist and Exodus, web wallets like MyEtherWallet and many more. Of course, you can always run a core wallet which will download the whole blockchain to your computer if you want to make a network stronger, or create a paper wallet for your ethers. Regardless of the option you choose, always do a backup and keep your private keys safe and away from others, since they are your only link to your encrypted tokens. That being said, we believe that now it’s time to conclude this article.

Ethereum | Conclusion

As you can see, by providing a development platform for various contracts and applications, Ethereum managed to create a whole new ecosystem, thus contributing immensely to the popularization of cryptocurrencies. Sure, it is still in early development stages which is a reason for some flaws, but we strongly believe that all problems will be solved in time. It will be interesting to see the success of future applications developed on this platform, as well as upcoming enterprise solutions that will surely make this cryptocurrency even stronger. All in all, Ethereum has a bright and exciting future ahead, and we can recommend you to be a part of it. Be sure to browse other related articles on our website for more information about the crypto world, as well as stay up to date with our future releases!

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Author: Ben Prescott
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