What Is Ethereum?
Ethereum is a decentralized platform the main feature of which is smart contracts. Smart contracts are programs/applications that run and run uninterruptedly on the network. The code of smart contracts is visible to everyone and does not allow changes, which provides absolute openness and protection against fraud.
The popularity of cryptocurrencies is directly related to the launch of Ethereum. The new environment allowed to maximize the potential of blockchain in the fintech sector and gave impetus to the launch of new startups and projects, which in turn attracted huge investments. As a result, Ethereum was able to come in second place among the most popular cryptocurrencies.
Who created Ethereum?
The Creator of Ethereum is the Canadian developer of Russian origin Vitalik Buterin. Vitalik became truly interested in cryptocurrency in 2011. At the same time, he seriously studied programming and was thinking about creating something new on the blockchain. In 2014, the Fundraising for platform development through crowdfunding began. Ethereum ICO collected 31191 BTC (more than 18 million dollars, at the time), and the project itself also attracted banks and financial organizations. The platform was launched in July 2015. However, it fully earned only in March 2016 with the release of the Protocol Homestead
What was Ethereum created for?
Ethereum has given absolutely new opportunities to create decentralized projects and startups based on blockchain and smart contracts. One of these startups was The DAO. It is a platform to find projects for investment, built on a smart title search. ICO The DAO has become one of the most successful in history. During the crowdfunding managed to collect 150,000,000 dollars of investment. However, due to an error in the source code part of the funds (60 million) was stolen.
The only reasonable solution for the return of lost funds was the offer to roll back with a hardfork. This procedure would make it possible to make a copy of the Blockchain in its original state. This led to the division of Ethereum into two parts, Ethereum And Ethereum Classic(the pre-rollback version). The funds were returned at the cost of one of the most important principles of the blockchain – the irreversibility of operations.
The entire cryptocurrency world has revived after the launch of Etherium. The authors of the platform have implemented an environment with convenient tools in which a person can create a startup or application of a decentralized nature without serious technical training. As an example, the source code of Namecoin cryptocurrency takes only 5 lines. So Ethereum is possible to call the adapted framework, in which all development is based on the clever title search.
The possibility of using Ethereum
Ethereum is one of the most flexible and popular cryptocurrency. It is capable of performing all the same functions as Bitcoin, Litecoin, Dash, Ripple:
1. Payment instrument
2. Form of assets storage
3. Investment asset
In terms of support and prevalence, ETH is one of the best existing digital currencies on the market. At the same time, the ether functions also affect internal calculations and registration of transactions in the platform.
However, the main value of Ethereum is not in its “cryptocurrency” properties. This platform allows you to create decentralized projects on the blockchain, ranging from charitable foundations, and completing applications for sports betting or poker rooms. At the same time, the platform is open, so everyone can access it. To do this, just download the browser Mist or a special extension for Google Chrome called “MetaMask”.
Interesting applications/projects implemented on the Ethereum blockchain:
BackFeed is a social-economic platform that makes up all sorts of rankings.
FreeMyVunk program is used to monetize the rating in video games.
The Rudimental crowdfunding environment for writers, journalists, and other creative people.
First Blood is a platform for gamers and fans of betting on eSports.
Ethereum virtual machine
The Ethereum platform accepts many programming languages (Solidity, Serpent, etc.,) including visual programming languages. That’s what makes it so versatile and flexible.
How was this environment created? Thanks to the Ethereum virtual machine (EVM). It is a Turing machine that compiles smart contracts into bytecode before sending them to the blockchain. It is also used in cycles, which guarantees the performance of virtually all operations at the smart contracts. Potentially “infinite” cycles are screened out by the platform through a mechanism called gas. At the same time, you will not pay for the use of this powerful computer. All costs are borne by the network.
It turns out that Ethereum is a kind of blockchain Pandora with almost unlimited possibilities for use, thanks to its flexibility, power, and versatility. This is true, otherwise, companies like Microsoft, IBM, JPMorgan would not have shown interest in it. The wave of ICO 2016-2017 is the result of the appearance of Ethereum with its smart contracts. Most of these crowdfunding projects release tokens of the ERC-20 standard and use the Ethereum blockchain.
Pros and Cons of Ethereum
Advantages of Ethereum
- Versatility – supports different programming languages and algorithms of different complexity, and smart contracts are used in different areas;
- Flexibility – the platform is open to improvements, upgrades, updates;
- Publicity – details of updates and innovations are announced in advance;
- Accessibility – Ethereum is an open platform for the development of decentralized applications. And as a developer can be almost anyone.
Disadvantages of Ethereum
- Centralization – although Ethereum positions itself as a DAO (Decentralized Autonomous Organization), but the case of the hard fork network in 2016 shows that the platform has elements of centralization;
- Vulnerabilities – the DAO case shows that the platform can “skip” imperfect projects;
- Documentation – developers complain about the lack of clear documentation, which complicates interaction with the platform.
We have tried to describe the key features of The Ethereum platform and cryptocurrency. We noted several times that the Ethereum environment is unstable – it is actively updated and improved. To follow the latest changes to the platform, use the official website Ethereum.org.