All about Ethereum

Whether you are a seasoned crypto investor or completely new to this space, you surely have heard about Ethereum. Since 19-year-old Vitalik Buterin published its whitepaper in 2013, Ethereum has emerged as one of the most popular names in the cryptocurrency world. Moreover, several experts believe it is well-placed to get bigger shortly.

It is imperative to know all the vital details related to this cryptocurrency with that in context. Scroll through to gain insight.

What is Ethereum?

Launched in 2015, Ethereum is the world’s second-largest cryptocurrency after Bitcoin in terms of market cap. Also, it is a decentralised computing platform which can run various applications that includes the complete DeFi universe.

History of Ethereum – timeline

Given below is a timeline of all the significant milestones, updates and forks to the Ethereum blockchain:

2013

• 27^th November 2013: Whitepaper released 

2014

• 1^st April 2014: Yellowpaper released
• 22^nd July 2014 to 2^nd September 2014: Official Ether sale

2015

• 30^th July 2015: Announcement of first live release – Frontier
• 7^th September 2015: Frontier thawing

2016

• 14^th March 2016: Homestead
• 20^th July 2016: DAO fork
• 18^th October 2016: Tangerine whistle
• 22^nd November 2016: Spurious Dragon

2017

• 16^th October 2017: Byzantium

2019

• 28^th February 2019: Constantinople
• 8^th December 2019: Istanbul

2020

• 2^nd January 2020: Muir Glacier
• 14^th October 2020: Staking deposit contract deployed
• 1^st December 2020: Beacon Chain genesis

2021

• 15^th April 2021: Berlin
• 5^th August 2021: London
• 27^th October 2021: Altair
• 9^th December 2021: Arrow Glacier

How does Ethereum work?

Ethereum works based on a blockchain network similar to other cryptos. It works as an open software platform functioning on a blockchain hosted on several computers globally, making it decentralised. 

Every computer has a copy of the blockchain, and widespread agreement is necessary before implementing any changes to the network.

The Ethereum and Bitcoin blockchains are similar in that they are a record of the transaction history. But in addition to that, the Ethereum network allows developers to develop and deploy DApps stored on the blockchain.

How does Ethereum have value?

Like any other asset, the markets set the value of Ethereum. Based on demand, Ethereum’s price can see fluctuations day-to-day. Its value shows the volatility compared to equities like Fortune 500 stocks or currencies like the US dollar, as it’s still an emerging technology.

There are several reasons why the market prices it in a particular manner. Many investors consider that Ethereum’s flexibility as a platform to run DeFi applications and issue stablecoins forms the basis for determining its value. This leads to increased transaction fees and a growing user base.

Components of Ethereum blockchain

Listed below are the various components of the Ethereum blockchain:

Ether: Ether or ETH is the native coin of the Ethereum blockchain.

Gas: Gas is a unit of measurement on the Ethereum network for the computing power used to execute a transaction or a smart contract. In simpler terms, gas refers to the fee necessary to carry out a transaction on Ethereum successfully.

Transaction: An Ethereum transaction is an action initiated by an externally-owned account (an account which isn’t managed by a contract but by a human).

Nodes: In general, blockchain nodes act as interactive storage points for information on any given blockchain. Three distinct types of nodes exist on the Ethereum blockchain – archive, full and light. 

EVM: EVM or Ethereum Virtual Machine is a computation engine which functions as a decentralised computer with numerous applications that can be executed. It is the Ethereum blockchain’s core framework.

Smart contracts: Smart contracts refer to distinct blockchain addresses on compatible networks accompanied by some particular codes. For the Ethereum blockchain, smart contracts are processed on the EVM.

Ethereum mining: Ethereum mining refers to forming a block of transactions to be added to the blockchain.

Blocks: Blocks refer to batches of transactions with a hash of the last block in the chain. 

Consensus: With respect to blockchain, reaching consensus implies that a minimum of 51% of the network’s nodes agree on the next global state. Regarding Ethereum, the nodes should reach an agreement on the current state of the network.

Staking: Staking refers to the process of depositing 32 ETH to activate validator software.Solidity: Solidity is an object-oriented, statically-typed curly-braces high-level programming language designed to develop smart contracts which run on Ethereum.

Advantages of Ethereum

These are some features that make Ethereum stand out from other smart contract platforms:

• Decentralisation

Ethereum is the world’s second most decentralised crypto after Bitcoin. Having such a decentralised network proves to be an excellent safeguard against interference.

• Robust developer community

Notably, Ethereum has the world’s biggest developer community, which is even bigger than Bitcoin. Such a huge developer base will go a long way to make this crypto useful for an average individual, leading to mass adoption.

Disadvantages of Ethereum

Following are some challenges that Ethereum faces currently:

• The programming language – Solidity

Developers willing to develop tokens and apps on Ethereum have to code in Solidity, a new programming language with some well-known issues.

• Slow speed

Ethereum’s 15 TPS speed is double that of Bitcoin’s (7 TPS) but isn’t nearly enough.

Ethereum: Use cases

Listed below are some of the use cases of Ethereum:

• Financial institutions use Ethereum based payment systems as a channel to make remittances and payments.
• Building different DeFi applications
• Used as a means of payment
• Used in voting systems
• Applicable in the health sector
• Used in the shipping industry to prevent misplacement of goods and track cargo
• Can be used to develop a digital identification system

How to buy Ethereum?

You buy Ethereum by following these steps:

Step 1: Select a cryptocurrency exchange

Step 2: Fund your account

Step 3: Place an order to buy Ethereum

Step 4: Store your Ethereum

How to sell Ethereum?

To sell Ethereum, follow these steps:

Step 1: Choose a cryptocurrency exchange to sell Ethereum

Step 2: Create an account if you don’t have one already and set it up

Step 3: Deposit Ethereum

Step 4: Sell Ethereum

Future – Ethereum 2.0

Ethereum 2.0 is an upgrade to the blockchain that aims at enhancing the security, speed, scalability and efficiency of the Ethereum network via several network infrastructure changes. Most importantly, switching to a PoS (proof-of-stake) from PoW (proof-of-work) consensus mechanism. With this upgrade, the Ethereum network will be able to ease bottlenecks and process more transactions.

Unlike other cryptos like Bitcoin, which is suitable only as a store of value and payment option, Ethereum has many real-world applications. Individuals, especially those new to the crypto space, must keep all the details mentioned above.

Frequently Asked Questions

Q1. Why do many people call Ethereum a ‘world computer’?

Ans. With Ethereum, numerous nodes replace centralised servers. These nodes are run by volunteers globally, forming a “world computer.” Hence, several advocates refer to Ethereum as a “world computer” which can decentralise the internet.

Q2. When do forks occur?

Ans. Forks occur when there is a need for major technical changes or upgrades to the network.