Block chain technology is being used to create applications that go beyond just enabling a digital currency. Launched in July of 2015, Ethereum is the largest and most well-established, open-ended decentralized software platform. A common misconception is that people think that Ethereum is a cryptocurrency. The truth is, Ethereum is actually a block chain. The currency that is used on that Block chain is called Ether. So, when people are talking about the price of an Ethereum, they’re actually talking about Ether. Ethereum’s block chain can be used for many different things because they use what is called a smart contract. So, anyone can create a smart contract and submit it to be on the Ethereum block chain. This does however come at a cost, which is paid in Ether.
Ethereum enables the deployment of smart contracts and decentralized applications (dapps) to be built and run without any downtime, fraud, control or interference from a third party. Ethereum comes complete with its own programming language which runs on a block chain, enabling developers to build and run distributed applications. Ether is used mainly for two purposes it is traded as a digital currency on exchanges in the same fashion as other cryptocurrencies, and it is used on the Ethereum network to run applications. The Ethereum platform has thousands of independent computers running it, meaning it’s fully decentralized.
The Ethereum blockchain
The structure of the ethereum blockchain is very similar to bitcoin’s, in that it is a shared record of the entire transaction history. Once a program is deployed to the Ethereum network these computers, also known as nodes. Every node on the network stores a copy of this history. The big difference with ethereum is that its nodes store the most recent state of each smart contract, in addition to all of the ether transactions. For each ethereum application, the network needs to keep track of the ‘state’, or the current information of all of these applications, including each user’s balance, all the smart contract code and where it’s all stored.
How it works?
Once a smart contract is deployed on the Ethereum network, it cannot be edited or corrected, even by its original author. It’s immutable. The only way to change a smart contract would be to convince the entire Ethereum network that a change should be made and that’s virtually impossible. This creates a very serious problem since unlike Bitcoin, Ethereum was built with the ability to create really complex contracts, and complex contracts are very difficult to secure. With any contract, the more complicated it is, the harder it is to enforce as more room is left for interpretations, or more clauses must be written to deal with contingencies.
In real life, all a contract is, is a set of “Ifs” and “Thens”. Meaning a set of conditions and actions. For example, if I pay my landlord $1500 on the 1st of the month Then he lets me use my apartment. That’s exactly how smart contracts work on Ethereum. Ethereum developers write the conditions for their program or Dapp and then the Ethereum network executes it. They are called smart contracts because they deal with all of the aspects of the contract enforcement, management, performance, and payment.
What can Ethereum be used for?
Ethereum enables developers to build and deploy decentralized applications. A decentralized application or Dapp serve some particular purpose to its users. Bitcoin, for example, is a Dapp that provides its users with a peer to peer electronic cash system that enables online Bitcoin payments. Because decentralized applications are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.
Ethereum can also be used to build Decentralized Autonomous Organizations (DAO). A DAO is a fully autonomous, decentralized organization with no single leader. DAO’s are run by programming code, on a collection of smart contracts written on Ethereum. The code is designed to replace the rules and structure of a traditional organization, eliminating the need for people and centralized control. A DAO is owned by everyone who purchases tokens, but instead of each token equating to equity shares & ownership, tokens act as contributions that give people voting rights.
Ethereum is also being used as a platform to launch other cryptocurrencies. Because of the ERC20 token standard defined by the Ethereum Foundation, other developers can issue their own versions of this token and raise funds with an initial coin offering (ICO). In this fundraising strategy, the issuers of the token set an amount they want to raise, offer it in a crowd sale, and receive Ether in exchange. Billions of dollars have been raised by ICOs on the Ethereum platform in the last two years, and one of the most valuable cryptocurrencies in the world, EOS, is an ERC20 token.
The Blockchain technology itself has a potential of revolutionizing web-based services as well as industries with long-established contractual practices. For example, an insurance industry in the US possesses more than $7 bln inclined life insurance money, which can be redistributed fairly and transparently using Blockchain. Moreover, with the implementation of smart contracts, clients can be able to simply submit their insurance claim online and receive an instant automatic payout, considering that their claim met all the required criteria. Essentially, the Ethereum Block chain is capable of bringing its core principles trust, transparency, security and efficiency – into any service, business or an industry.
Advantages of Ethereum
Ethereum platform benefits from all the properties of the Blockchain technology that it runs on. It is completely immune to any third-party interventions, which means that all the decentralized apps and DAOs deployed within the network can’t be controlled by anyone at all. Any Blockchain network is formed around a principle of consensus, meaning that all the nodes within the system need to agree on every change made within it. This eliminates possibilities of fraud, corruption and makes the network tamper-proof. The whole platform is decentralized, which means there is no possible single point of failure. Hence, all the apps will always stay online and never switch off. Moreover, the decentralized nature and cryptographic security make the Ethereum network well protected against possible hacking attacks and fraudulent activities.
Disadvantages of Ethereum
Despite the fact that smart contracts are meant to make the network fault-proof, they can only be as good as the people writing the code for them. There is always room for human error, and any mistake in the code might get exploited. If that happens, there is no direct way to stop a hacker attack or an exploitation of said mistake. The only possible way of doing so would be to reach a consensus and rewrite an underlying code. However, this goes completely against the very essence of the Blockchain, as it is supposed to be an unchangeable and immutable ledger.
What’s the downside of decentralized Ethereum applications?
Despite bringing a number of benefits, decentralized applications aren’t faultless. Because smart contract code is written by humans, smart contracts are only as good as the people who write them. Code bugs or oversights can lead to unintended adverse actions being taken. If a mistake in the code gets exploited, there is no efficient way in which an attack or exploitation can be stopped other than obtaining a network consensus and rewriting the underlying code. This goes against the essence of the blockchain which is meant to be immutable. Also, any action taken by a central party raises serious questions about the decentralized nature of an application.
What is Ethereum Going to be Doing in the Future?
Ethereum solves this issue, which means it has lots of potential for the future. So now you not only know what is Ethereum but also how it works. More and more real technology is connected to the internet every day we call it the ‘Internet of Things.’ Door locks, refrigerators, ovens, light bulbs, boilers, and TVs are all connected to the internet and they all need to be run safely and with clear instructions
Despite the fact that Ethereum, much like Bitcoin, has been around for several years, it only just started gaining mainstream media’s and general public’s attention. A lot of experts agree that it is a disruptive technology that is set to not only completely change the way Internet works but also revolutionize services and industries that have been existing for hundreds of years.
Vitalik Buterin, the creator of Ethereum, is being very careful and modest with his predictions. In a recent interview, he stated that he intends to keep Ethereum the leading Blockchain-related platform, focusing on technical issues and security improvement in the new future.
Overall, opinions on the future of Ethereum among cryptocurrency experts are generally positive. However, there are many old-school financial experts who, despite the extraordinary success and relative stability of both Bitcoin and Ether, as well as the undeniable importance of technologies behind the projects, are still predicting their impending downfall.
Impact of COVID-19 on Ethereum Price:
Ethereum (ETH) price has fallen by 1.27% in the past 24 hours. This comes as the new upgrade to Eth 2.0 is just around the corner. Current price levels at $168.63 have made everyone believe that Ethereum holds promise and may do even better in the markets this year. The first fundamental thing to change for Ethereum this year would be the shift to proof-of-stake (PoS). This shift creates a new scenario for the world’s second-largest cryptocurrency. Proof-of-stake (PoS) is seen by many to be the next big thing to hit the crypto space. There are already many problems surrounding proof-of-work systems (PoW). Ethereum’s shift from POW to PoS is seen as the first fundamental shift that will allow for new variables within the Ethereum ecosystem. The scaling solutions that are coming in Eth 2.0 are going to enable transactions within the Ethereum ecosystem to become faster. This also raises the bar for the Dapps within the Ethereum ecosystem.
This also comes as the Bitcoin halving event is only around 35 days away. Ethereum price levels already indicate that a price rally might just be in the works. With prices being around the $170 region, many think that this is an indication of a bullish trend that is set to occur anytime soon. The monthly high of $176 in the short term and a retracement to below $170 indicates that support levels for the cryptocurrency token are being tested. It also is an indication that price momentum has returned to the cryptocurrency markets. COVID-19 seems to batter all the markets within its path. Cryptocurrency markets have been the exception so far.
The Ethereum platform is also helping to shift the way we use the Internet. Decentralized applications are pushing a fundamental change from an Internet of information where we can instantly view, exchange and communicate information to the Internet of value where people can exchange immediate value without any intermediaries. It takes a (global) village to raise a block chain. The live network and the community of open source developers contribute significantly to this effort. They continuously refine and harden the Ethereum platform, helping it get faster at responding to industry demands for the value propositions it offers. These investments of time and resources speak to their faith in Ethereum governance and the value that businesses and developers see in its capabilities. While it’s still early days, and there will no doubt be more hurdles to overcome, Ethereum looks to be a truly transformational platform. With many of the most exciting applications yet to be developed, we can only begin to wonder about the unimagined possibilities that await.