Posted April 10, 2022
ETHEREUM - WHAT IS IT HOW DOES IT WORK AND WHAT ARE ITS ADVANTAGES?
Etherium - What is it, How Does it Work and What are its Advantages?
One of the most influential people in the crypto world today, Vitalik Buterin, founded Ethereum in 2015.
The project was officially unveiled to the public in January 2014 at a conference in Miami, and just a few months later Vitalik and his team (Mihaj Alisi, Antonio Di Lori, Charles Hoskinson, Joe Lubin and Gavin Wood) started pre-selling of ETH tokens to finance further development.
In the resale of Ethereum tokens for Bitcoin, they collected 31,000 Bitcoins, worth about 18 million dollars at that time.
Thanks to Vitalik’s vision, Ethereum was given the opportunity to create decentralized technology.
Decentralized applications, which bring with them transparency and trust, remove intermediaries and enable users to interact directly on a global scale.
They can be accessed easily, conveniently and quickly using the Ethereum network.
Although Bitcoin was the inspiration for the development of the Ethereum network, it is much more than a competitive cryptocurrency to Bitcoin, because it is a comprehensive network that includes an Internet browser, programming language and payment system.
In addition, this cryptocurrency offers tools for developing decentralized applications and operates on the principle of smart contracts.
Since its establishment, Ethereum has brought innovative solutions to the crypto industry and many new functionalities.
The biggest trends in the crypto industry that were first seen on the Ethereum network are:
Technological Foundations of the Ethereum Network
Vitalik conceived and developed a decentralized open source software platform for executing smart contracts.
In this way, transactions, interactions and changes on the network are recorded on the Ethereum blockchain.
This system is consisting of nodes, which are volunteers who have the entire ethereum blockchain record on their computers. They are in charge of maintaining consensus on the rules of transactions that are outlined in smart contracts.
It is in this segment that Ethereum differs from Bitcoin, which is exclusively designed as digital money.
The rules that smart contracts enforce are very flexible and can be adapted to many everyday situations.
Their advantage is their irrevocability, so that with computer accuracy we can guarantee the fulfillment of all conditions without a doubt.
As a result of this innovation, many believe that Bitcoin and Ethereum are not direct competitors. They cover different fields of application and have different goals.
What is most interesting is the large number of Bitcoins transferred to the Ethereum blockchain.
In such an environment, Bitcoin acquires completely new use values and unlocks its full potential.
The reverse action of switching Ethereum to the Bitcoin network is not possible and would not be of much use.
Since its inception, many development teams around the world have been working on the development of the Ethereum network.
His code is publicly available and, anyone who wishes, can view or contribute to this work of art in the world of programming.
The main guidelines for further development are proposed by the Ethereum Foundation, which also funds projects made on the Ethereum blockchain.
In practice, Ethereum has met with a large number of users, which has focused its development on maintaining stability without sacrificing the decentralized structure it possesses.
Improvements to the Ethereum protocol are very common, but studious above all.
The main improvement that Ethereum is working on is called Ethereum 2.0, which should solve the problem of high transaction costs, as well as further increase the stability and speed of data entry.
In addition, this would lead to a departure from the current Proof of Work transaction confirmation system and a move to a less demanding and environmentally friendly Proof of Stake, as strong electricity-powered hardware will not be required to confirm transactions.
Trust in Ethereum
Ethereum is a huge blockchain network in which it is possible to insert any type of data or property, whether in the form of money or real estate.
Transactions within this network are performed at high speed and are recorded in the form of smart contracts, on the basis of which complex decentralized applications and infrastructures can be created.
Transactions over the Ethereum network automatically execute programming language lines, upon fulfillment of certain conditions from the smart contract.
These transactions do not have to always involve money, but, for example, the transfer of property rights. There are no intermediaries, no control bodies.
Impartial nodes and miners are the main building blocks involved in the verification of transactions.
Due to this arrangement, there is no need for trust between the two parties involved in the transaction.
Any attempts (internal or external) of manipulation are extremely impractical, which means that the risk of losing money is reduced to almost zero.
All transactions on Ethereum remain forever available on the blockchain.
Tracking, control, analysis and status of transactions can be easily checked on popular block browsers created by the Ethereum community.
Possibility of Earning on Ethereum
Through the endless range of possibilities that Ethereum offers, various practical but also fun applications of Ethereum stand out, where it is possible to earn their token.
Users who participate in transaction validation are called miners.
Miners on the Ethereum network are paid in the basic cryptocurrency of the platform called Ether or Ethereum (ETH).
In the near future, Ethereum will move from previous mining to a pledge transaction confirmation system, which means that all ETH token owners will be able to participate in network maintenance and receive a reward for holding an ETH token.
Developers are focusing on developing applications and tools on the Ethereum blockchain.
One of the main advantages of this process is the high level of product transparency that is otherwise lacking in various sectors of industry and the extremely easy way to obtain capital to work on the project.
When the application becomes functional, it will be fully accessible to all network users without any restrictions, which bypasses many legal and locational obstacles that existing applications have.
Defi (Decentralized Finance)
It is possible to deposit money and other cryptocurrencies on the Ethereum network.
By providing funds for use, users receive a refund in the form of interest and are in the role of a bank that provides monetary liquidity to the network for its needs.
Such functionality is one of the DeFi mechanisms that enable the migration of existing economic banking activities in a decentralized and direct manner.
It is possible to deposit money, borrow money, earn interest and invest in other protocols using secure and pre-agreed conditions.
Digital Art and Virtual Reality
Artists and digital content creators use NFT tokens to demonstrate their skills and charge for their work.
Great works of famous artists can be found at digital auctions, digital prototypes of clothing combinations of well-known brands, documented forms of various events that after purchase are transferred to the user’s wallet and become his property.
Anyone can make NFT tokens and easily become a digital artist whose tokens will be available on the Ethereum blockchain.
The latest trend in the crypto industry is “Metaverse”, which enables the use of NFT tokens in numerous games, virtual exhibitions, concerts and gatherings of fans of famous brands and organizations around the world in virtual space in just a few clicks.
That the possibility of using Ethereum is limitless as the human imagination, confirms the recently held concert in virtual reality where the DJ played music in an improvised arena for which the ticket was in the form of an NFT token.
Visitors dressed their avatars for the event, so there were a lot of fashion brands like Nike and Adidas, and some guests came with very rare, expensive accessories.
Many celebrities have their own NFT collections and NFT tokens that allow them tickets to VIP events, so it is normal to believe that there will be even more parties like this in the future.
Ethereum is the Future
As a decentralized value transfer and application creation system, Ethereum has had an incredibly successful start, rapid development and has become a trendsetter in the crypto industry.
It offers users advanced options through a smart contract mechanism, as well as maximum data protection.
The transactions themselves are fast and secure. They can include a variety of goods and resources, not just money.
Considering all the advantages and benefits, we have no doubt that Ethereum will continue to grow primarily in the number of users and possibilities of use.
This is the right time to get acquainted with this platform and take the first steps towards the future of money.
Ethereum currently ranks second as the most valuable and well-known cryptocurrency after Bitcoin, but with far more advanced uses.
In addition, with Vitalik’s persistence in constant improvements, which he works on a daily basis with the best community of developers in the world, it is only a matter of time before he becomes equal with Bitcoin.
Ethereum 2.0 brings revolutionary improvements and even more affordable use.
In addition to the popular purchase of Bitcoin by global companies and investment funds, Ethereum is on the balance sheet as a profitable investment in the long run.
Contrary to the investment in the ETH token itself, the Ethereum network is recognized as an extremely fertile ground, not only for applications but also for huge infrastructure projects of which the most notable is the possibility of creating digital national currencies on the Ethereum blockchain, which is the first choice of many countries and financial institutions.