What is Ethereum (ETH)?

Ethereum is very important in the world of cryptocurrencies. Many people have heard of Ethereum. It is the second largest cryptocurrency network by market capitalization.Layer 1virtual currency.

ETH (Ethereum) Market Information
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ETH (Ethereum) Market Information

Six Critical Phases Shaping the Future of Ethereum

The 2024 roadmap presented by Ethereum co-founder Vitalik Buterin focuses on six main phases

The Merge: This phase, completed in September 2022, moved Ethereum from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. This transition is aimed at implementing a simpler and more robust PoS.
The Surge: This phase, currently underway, focuses on enhancing network scalability. This includes increasing transaction processing speed and reducing transaction costs, including data sharding.
The Scourge: Addressing security vulnerabilities and improving network robustness are the goals of this phase. This includes exploring new consensus mechanisms and enhancing smart contract security.
The Verge: We will work to simplify the user experience and enhance developer tools. This includes simplifying the ethereum interface and improving the development process for applications such as dApps.
The Purge: Improve overall efficiency by removing old code and organizing unnecessary code. This streamlines the network and reduces security risks associated with obsolete code.
The Splurge: Investments in research and development to explore new technologies and potential advances in ethereum. This includes exploring privacy enhancing solutions such as zk-SNARKs and rollups.

A return to the spirit of cyberpunk

Buterin emphasized the importance of reintroducing the cyberpunk vision of Ethereum's origins. This vision focused on decentralized applications, privacy protection, and peer-to-peer communications, and was overshadowed by financial applications such as DeFi.

The integration of privacy-enhancing technologies such as rollups and zero-knowledge proofs is a step toward reviving this cypherpunk spirit. These advancements will allow developers to create more private and censorship-resistant applications on ethereum.

Throughout these phases, Ethereum will evolve into a more robust, scalable, and efficient network. By returning to the underlying principles of Cipherpunk, it is expected to become a force for positive change in the digital world.Reference site 1 Reference site 2 Reference site 3

Origin and Mechanism of Ethereum

Ethereum is an open source software platform developed in 2015 and leverages blockchain technology. The platform allows developers to build and deploy decentralized applications (DApps) and smart contracts. This eliminates middlemen in transactions, making them more efficient and secure. For example, it is used for services such as housing contracts and money transfers.

Ethereum's Revenue Structure

Ethereum's revenues are related to actions and transactions on the network. When a user performs a transaction, they must pay a transaction fee (gas fee) to the miner and validator. This fee is a source of revenue for Ethereum, the majority of which is burned within the network and the remainder is distributed to the miners as compensation. Miners are also rewarded with ETH for performing validation work on the network.

Ethereum Applications

The Ethereum network is not simply limited to transactions using ETH. It is designed to automatically fulfill contracts when certain conditions are met through the use of smart contracts. This ensures transparency and efficiency. In addition, DApps are computer programs that run on the blockchain and are not controlled or governed by a single entity. This makes them highly secure and reliable.

What is Ethereum's Smart Contract?

Ethereum smart contracts are self-executing contracts that are recorded on the blockchain. They are written in code and have applications as diverse as insurance, supply chain, real estate, and gaming. To receive a token in Ethereum, ETH must be sent to the smart contract, which will send back the corresponding token. It is important to note that the tokens are not ETH itself, but are created according to the ERC-20 standard.

Types of tokens and their uses

There are two main types of tokens: utility tokens and security tokens. Utility tokens are intended for use in DApps and for product promotion, while security tokens are investment-oriented in nature. Security tokens must follow strict regulations, whereas utility tokens do not.

Various Applications of DApps

DApps, which are created in Solidity, an Ethereum-specific code language, are known for their wide variety of uses. These include non-funded tokens (NFTs), ICOs, decentralized finance (DeFi), gaming, social networks, DAOs, exchanges, etc. DApps are characterized by the fact that they are not controlled by a centralized organization and do not require an intermediary.

Examples of typical DApps

U.S. Department of Commerce: A cryptocurrency with a stable value tied to the U.S. dollar, used for protection against inflation and for rapid international transfers.
Bored Ape Yacht Club (BAYC): This popular NFT is a high value digital collectible. Owners are offered specific memberships and access to events.
Metaverse and Play-to-Earn DApps: Decentraland and Axie Infinity, for example, provide virtual land and characters to establish player ownership.
DAO: A decentralized network for collective decision-making, characterized by transparent fund allocation and decision-making.
Filecoin: Distributed file storage protocol for cost-effective data storage.
Uniswap: A decentralized exchange where users can exchange ERC-20 tokens without intermediaries.
AAVE: Immediate crypto asset loan secured by ETH or wBTC.
MakerDAO: You can borrow a stablecoin called DAI using ETH as collateral.

History of the Ethereum Network

Vitalik Buterin, an early investor in Bitcoin, developed Ethereum because he believed blockchain technology had applications beyond digital currency. However, in 2016, a major security incident occurred, causing the blockchain to split. Since then, Ethereum has grown to become the foundation behind many tokens and DApps.

Future Prospects for Ethereum

Ethereum is currently undergoing two major upgrades, "The Merge" and "Sharding". This is to improve network scalability, reduce power consumption, and increase transaction speed and security. Ethereum is moving from Proof of Work to Proof of Stake, which will make transaction verification more efficient. Sharding will expand network capacity and allow for more transactions.

Advantages of Ethereum

Ethereum is an innovative decentralized network that enables peer-to-peer transactions. It requires no intermediaries and is accessible online 24 hours a day. Transactions on the blockchain protect privacy and everyone can easily access the platform.

Smart contracts do not assume trust and automatically execute transactions based on the behavior of the code. This allows crypto funds and others to automatically provide returns to investors, eliminating third-party intervention.

Disadvantages of Ethereum

The current Proof of Work consensus requires a lot of energy, but we plan to move to an energy efficient Proof of Stake in a future Merge upgrade. Smart contracts are publicly available and are at risk of abuse.

In addition, transaction fees can skyrocket and become expensive when the network is congested. Layer 2 solutions and sharding upgrades are underway to solve this.

Comparison of Bitcoin and Ethereum

Ethereum and Bitcoin are both decentralized digital currencies and share similarities in payment methods and wallet storage. However, ETH is a more versatile network with faster transactions, used primarily for smart contracts and DApps operations. Currently, Ethereum is planning a transition from PoW to PoS, which will change the transaction verification process.

Conclusion.

The Ethereum network continues to thrive and is on its own unique path, different from Bitcoin. The world of cryptocurrencies is volatile, and Ethereum is no exception, but its innovation and promise hold a lot of promise.