By Tofiq Aliyev
On Oct 19, 2020
In this blog, we will inform you about Ethereum. According to coinmarketcap, Ethereum(ETH) is the second most valuable cryptocurrency after Bitcoin. Let’s start with the definition of Ethereum first. Ethereum is an open-source, decentralized software platform based on Blockchain technology. It enables you to write “smart contracts” – a type of code that intends for the automatic execution of contracts (without any interruption, fraud, control, or intervention from a third party). More than that, Ethereum is also a programming language that lets anyone build and operate decentralized applications (also known as DApps) run on Blockchain.
Ether is the specific digital token of Ethereum. Unlike bitcoin, the essential purpose of Ether is not peer-to-peer payment. When users make a “smart contract” or broadcast apps to the network using the Ethereum blockchain, the nodes who run these programs are get paid in amounts of cryptocurrency Ether. Sometimes you can mix the two, but keep in mind that Ethereum is a blockchain platform and Ether is a digital coin. You buy Ether to pay Ethereum miners for computational services and to secure the blockchain.
The Ethereum platform was founded by Russian-Canadian Vitalik Buterin. A 19 years old programmer published a white paper explaining his ideas on Ethereum in 2013. In the white paper, he describes Ethereum as a combination of a Blockchain-based decentralized mining network and software development platform. His aim was to democratize everything from business to money by using Blockchain technology. He wanted to take economic and financial control from world banks and leading organizations and put it in the hands of individuals. In the same year, he was awarded $ 100,000 for his studies along with the prestigious Thiel Scholarship.
Vitalik Buterin’s intentions caught the attention of other developers like Gavin Wood and Joseph Lubin, and they launched a crowdfunding campaign in 2014. The object of crowdfunding was to increase the value of Ether by selling Ethereum tokens to the participants. Eventually, more than $18 million raised, and in 2015 the first publicly available software version of Ethereum – Frontier launched. In 2016, after more than $ 50 million of funds of the DAO system were hacked by a malicious actor, it split into two separate blockchains, Ethereum, and Ethereum Classic. The new Ethereum was a hard fork of the original software to protect the system from further malware attacks. Since then, the platform has been rising rapidly.
In terms of the cryptocurrency aspect, they may seem similar. Both are a decentralized public blockchain network. But there are also considerable differences you should know. Ethereum and Bitcoin vary significantly in purpose and capability. Bitcoin is the most successful digital cryptocurrency using peer-to-peer technology to facilitate online payments. Ethereum is much more than a virtual coin. It is a blockchain-based platform that specially focuses on running “smart contract” execution, decentralized apps.
Bitcoin has a supply cap of 21 million. However, there is no such limit for the cryptocurrency of the Ethereum network. Also, Bitcoin’s average block mining time is 10 minutes while, Ethereum takes less than 12 seconds, which means faster confirmation for traders.
This is how Ethereum’s founder describes a comparison between Bitcoin and Ether.
“If we compare cryptocurrencies with valuable resources in the world and accept Bitcoin as GOLD and Litecoin as SILVER, Ethereum is PETROL. Because the technology underlying Ethereum will be the energy source in the internet system of the world. The same applies to Ethereum technology, as oil is used in many sectors and technologies in the world. That’s why we call Ether ‘crypto-fuel’. The energy needed by the Ethereum platform will be provided by Ether (ETH). “
The Ethereum platform is one of the most promising technologies on the market in the digital payments world that continues to gain value rapidly. It is a decentralized system that is immune to third-party interference and is not under anyone’s authority. Recently, Ethereum is planning to switch to the Proof-of-Stake consensus algorithm. It means that mining Ether will waste less energy than Bitcoin. The potential and applicability of the Ethereum can be unlimited, given the benefits of the Blockchain technology it runs on.