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What is Ethereum?

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Recently, there has been a lot of hype about Ethereum's merger, contributing to the hype about Ethereum and the bullish mood in the crypto market.

A recent conference call with Ethereum developers disclosed that the Ethereum main network would switch from proof-of-work to proof-of-stake in mid-September.

There are multiple reasons why the recent Ethereum merging announcement is significant: Ethereum is moving closer to transitioning to this new phase, which will lessen its environmental effect and drastically enhance transaction speed, among other benefits.

Since the announcement, Ethereum has increased by about 40%, and bitcoin has risen by more than 10%, trading above $22,000. Smaller altcoins have followed suit.

Ethereum is the second largest market capitalization in the cryptocurrency sector, behind only Bitcoin. Ethereum is frequently connected with the term "new Bitcoin"; however, the two projects are distinct.

The Ethereum cryptocurrency can be defined as a historical opponent of Bitcoin, as it is the world's second most popular and capitalized cryptocurrency.

For the time being, it is far from toppling the queen's throne, but this could change because Ethereum has grown far faster than bitcoin in the last year, and the recent development regarding the transition phase Ethereum wants to undergo very soon might change the whole narratives.

Ethereum was created in 2014 by Russian programmer Vitalik Buterin, and it now has a capitalization of over 200 billion dollars. It is a blockchain-based platform best known for its cryptocurrency, or native token, Ether (ETH), also known as Ethereum.

Ethereum's blockchain can support a wide range of other cryptocurrencies and applications. Network users can create, publish, monetize, and use a diverse set of decentralized applications.

 

How Does Ethereum Work

The operation of Ethereum is similar to that of Bitcoin (storage of the history of network transactions). But it is more complex than Bitcoin since it allows for the development of more complex applications.

Ethereum, in particular, enables the creation of smart contracts, which operate automatically on the network based on predefined criteria. For example, if a plane is at least one hour late, the airline will automatically reimburse 20% of the plane ticket due to a smart contract.

Ethereum, like the Bitcoin network, has its cryptocurrency, Ether, sometimes known as Ethereum, within the community. It is generated by the protocol, not by a bank or another institution.

Ether, like other cryptocurrencies, is generated by mining. "Miners" use their gear to conduct mathematical calculations for the network to confirm and secure transactions.

It should also be emphasized that Ethereum, like any other public blockchain, employs a consensus process to ensure that all network participants always agree on a single version of the blockchain data.

In mining, the Ethereum blockchain currently validates blocks using the energy-intensive proof-of-work (PoW) method, in which miners use massive amounts of power to quickly solve complex computational problems to win newly minted coins, this mining process results in the pollution of the environment.

On a separate chain, Ethereum developers have recently tested a proof-of-stake (PoS) system in which miners simply "stake" their coins to validate transactions and create new blocks. It promises to reduce blockchain energy consumption by 99.95% and prepares it for faster transactions.

This new mining process is the reason behind the hype in Ethereum in recent weeks. And the reason for the hyping is worth it because the current mining process, which is the proof-of-work, is discouraging many investors and big industries from looking into how they can use Ethereum.

 

What is Ethereum Used For?

Ethereum can be used in a variety of ways. Except for energy and network costs, which are about to change due to the mining process, its potential is limitless. There are several uses, the most common of which are:

  • ·       To send and receive without a bank or service provider
  • ·       You can program and publish smart contracts with Ethereum
  • ·       You can create your cryptocurrency
  • ·       You can create, distribute, and use dApps

Smart contracts enable the management of autonomous and decentralized organizations in particular (DAO). A dApp, unlike a smart contract, has no user or use restrictions.

Any service that would typically require an intermediary can be included in an application. You can, for example, find:

  • ·       Collectible token games ( NFT )
  • ·       Online banking services 
  • ·       A computer computing power rental service
  • ·       Sending encrypted SMS 
  • ·       Insurance
  • ·       Prediction markets
  • ·       Video games 
  • ·       Crowdfunding applications
  • ·       Digital art buying and selling services (in the form of NFT)

 

Conclusion

Although Ethereum, like Bitcoin, has been around for a while, it has only recently begun to gain mainstream media and public attention.

Many experts believe it is a game-changing technology that will completely transform not only how the Internet works but also services and industries that have existed for centuries.

And the change in the process of mining which has resulted in the recent hyping of Ethereum is something that will affect the market capitalization of Ethereum.

 

 

Aug. 25, 2022