- Characteristics of Ethereum
- How Is Ethereum Different From Bitcoin?
- What Does The Future Of Ethereum Look Like?
Ethereum is a blockchain platform made for decentralised applications (DApps) and smart contracts. Ether is the native cryptocurrency of the Ethereum network. In the Ethereum ecosystem, Ether is used to pay miners for securing the network and for transactions.
With Ethereum, you can build and run programs called "smart contracts." Smart contracts are code-based agreements that execute themselves. They automatically execute actions when certain conditions are met, without needing a middleman. In addition, Ethereum is also used to power a wide range of decentralized applications (DApps), which are similar to traditional applications, except they are not controlled by a central authority. These DApps can be anything from games and social networks to financial services and decentralized exchanges.
It was proposed by Vitalik Buterin in late 2013 and development began in early 2014, with the network officially launching on July 30, 2015. Ethereum is a major advancement over Bitcoin, primarily because it is programmable.
In the same way that Bitcoin relies on blockchain technology, Ethereum records all transactions across a network of computers using a distributed ledger. However, Ethereum's blockchain is more versatile and programmable.
Characteristics of Ethereum
Smart Contracts: Smart contracts were introduced by Ethereum, which are programmable, self-executing contracts that follow predefined rules. Transactions and processes can be executed in a quick and tamper-proof manner with these smart contracts.
Ethereum Virtual Machine (EVM): The Ethereum Virtual Machine is a runtime environment that executes smart contracts and DApps. It promotes security and trust by ensuring code runs consistently across all network nodes.
Gas Fees: Transactions and smart contract executions on Ethereum require users to pay gas fees. Gas is a unit of measurement for computational work on the network. While compensating miners, it prevents spam and prioritizes transactions.
Upgradeability: Ethereum is designed to be adaptable and upgradeable through a process known as hard forking. Keeping network compatibility while implementing improvements and bug fixes is made possible with this feature.
Interoperability: Ethereum is designed to be compatible with other blockchain networks, allowing for the exchange of assets and data across different blockchains through technologies like wrapped tokens and bridges.
How Is Ethereum Different From Bitcoin?
- Bitcoin is a cryptocurrency introduced in 2009. Ether is the name of the blockchain. Its native coin is Ether.
- The consensus mechanism for Bitcoin is Proof of Work (PoW) while Ethereum operates on Proof of Stake (PoS).
- Block time (the time it takes to generate a block) for Bitcoin is slower at 10 minutes. Ethereum is much faster, with a block time of 15 seconds.
- Bitcoin is considered a store of value in the crypto world, sometimes called digital gold. Ethereum was established to make transactions faster, draft smart contracts and DApps.
What Does The Future Of Ethereum Look Like?
Ethereum has been working on a major upgrade called Ethereum 2.0, which aims to transition from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism. It will be rolled out in multiple phases, with Phase 0 already launched. Ethereum's shift to PoS with Ethereum 2.0 is partly driven by environmental concerns associated with PoW. Ethereum's image and sustainability could improve with Eth2's efforts to make it more eco-friendly.
In the past, Ethereum has faced scalability issues due to network congestion and high gas fees. So, Ethereum 2.0 is expected to significantly improve scalability, making it more suitable for mainstream adoption. Layer 2 solutions like Optimistic Rollups and zk-Rollups are also being developed to enhance scalability in the short term.
Ethereum's development community is active, with ongoing proposals for Ethereum Improvement Protocols (EIPs). Continuous upgrades like these are expected to make the user experience a smooth one.