Ethereum Explained

Ethereum ETH explained

Introduction

The Ethereum is a network of open and decentralized blockchains that also produces a cryptocurrency: the Ether.

The Ethereum is an open and decentralized platform that offers developers a blockchain on which they can build decentralized applications (Dapps) by signing intelligent contracts. These Smart Contracts are scripts executing tasks automatically via the EVM (Ethereum Virtual machine) as soon as certain conditions are met.

the Ether (ETH) has two functions :

  • Remuneration of the miners who work on its network, that is to say, the people behind each computer serving as nodes of the network
  • Remuneration of the people who work directly on the Ethereum platform.

Ethereum (ETH) Metrics

We are going to explain a few metrics we can find on the Blockchain explorer.

The explorer is a website with all the real-time information of the blockchain.

When entering on the website, you have access to different metrics:

  • Price
  • Total Supply & MarketCap
  • Latest Blocks & Transactions
  • Daily Transaction Chart
  • Unique Addresses Chart
  • Etc.

Price

Total Supply and MarketCap

Supply MC

The Total Supply is the amount of Ether circulating.

The Market Capitalization of Ether is calculated by multiplying the Total Supply by the Price of ETH.

Latest Blocks & Transactions

blockstx

These are the latest blocks and transactions that were mined on the ethererum blockchain.

Daily Transaction Chart

daily transactions

You can also monitor the Daily Transactions Chart. This metric tells you how much the Ethereum network is really used. If the price moves up without being carried by fundamentals such as Daily Transactions, then you might be facing a price manipulation.

Unique Addresses Chart

uniquetx

What is the use of Ethereum (ETH)?

Smart Contracts & Decentralized Applications (dApps)

Ethereum allows developers to build decentralized applications. A decentralized application or Dapp serves a specific purpose. Bitcoin, for example, is a Dapp that provides its users with a peer-to-peer electronic payment system that allows Bitcoin online payments.

Because decentralized applications are composed of code that runs on a network of chains of blocks, they are not controlled by any central person or entity.

Smart contracts ethereum

All centralized services can be decentralized thanks to Ethereum. Think of all the intermediate services that exist in hundreds of different industries. Obvious services such as bank loans to intermediary services that most people rarely think of, such as securities registers, voting systems, regulatory compliance, and much more.

Theoretically, imagination is therefore the only limit.

Technically, applications and contracts must be simple given the network costs involved.

Ethereum is the first crypto-currency to have been created with such a big potential of evolution. The previous ones allowed for the most part only a monetary exchange.

Initial Coin Offering (ICOs) and ERC-20

An ICO is fundraising: a team presents a project to investors who take the risk of betting part of their capital on its potential success. The investors legitimately expect that every ether harvested will be used to carry out the project presented, as the project holders do not have the mandate to reinvest the assets but are expected to use them in the most efficient way.

Most of the ICO use the Ether (ETH) to raise their funds. They then generate a token on the Ethereum blockchain. Those tokens are called ERC-20.

Decentralized Finance (DeFi)

DeFi (Decentralized Finance) is an application of cryptocurrency and blockchain technologies. The main cryptocurrency involved in decentralized finance is the Ethereum. The latter allows creating many financial applications such as Maker with its DAI token and others.

the use of defi
Ethereum’s DeFi Projects breakdown

The objective of decentralized finance is to allow the transmission of value and the creation of finance for all and without intermediaries as banks or exchange platforms can be.

DeFi allows anyone to obtain loans. It is a totally decentralized system for borrowers and it is not possible for a loan to be refused. All you need is internet access.

It also allows lenders to make their money work with decent interest rates!

Several million Ether are thus put in collateral (blocked) for a value of several hundred million dollars.

defi and trading cryptocurrencies

Nonfungible Tokens (NFT)

Non-fungible tokens are unique and identifiable. Thus, two created tokens will not be exactly identical and interchangeable, each will have specific characteristics to define it.

In the case of Ethereum, non-fungible tokens were introduced by dete through the ERC 721 proposal, which serves as the standard for this type of token.

Among the best known NFTs are the CryptoKitties. Launched in December 2017, this decentralized application based on Ethereum allows the user to collect virtual chats, in the same way that we collect Pokémon cards for children.

Cryptokitty
Cryptokitties

Who is behind Ethereum (ETH)?

The Ethereum project was initiated by Vitalik Buterin. This young Russo-Canadian engineer has been passionate about computers since his childhood.

Vitalik Buterin: The Best Thing to Donate Money to is the Fight Against  Aging | Lifespan.io
Vitalik Buterin – Founder of Ethereum

In 2011, he discovers Bitcoin, and quickly finds interest in cryptography while quickly understanding its limitations. In 2013, after leaving the University of Waterloo, which he had joined a year earlier, he decided to devote himself fully to his research. Two years later, the Ethereum project is deployed.

The concern of decentralization and generalization of applications is the main reason for the creation of the Ethereum by Vitalik Buterin. His goal was to set up a blockchain infrastructure on which developers could create decentralized applications by signing intelligent contracts. These smart contracts have enabled a real breakthrough in the world of cryptocurrencies.

By definition, a cryptocurrency is a decentralized form of money. We are therefore far from a structure in which Vitalik Buterin would be the exclusive or even simply majority owner of the cryptocurrency he created. Nevertheless, he remains one of the main actors in the development of the blockchain.

What is the future of Ethereum (ETH)?

Ethereum (ETH) 2.0: Sharding

The problem today: if there is only one blockchain on which ALL transactions have to be recorded, this can create a considerable bottleneck.

Ethereum 2.0 will supposedly provide a solution to this scalability issue. This process is called “sharding”.

It is not entirely new: sharding is a method that technology giants are using to develop their databases.

So far, only a few blockchain projects have imagined how this could be achieved in theory. None of them have implemented it in the real world.

The big news: Ethereum 2.0 could soon be the very first blockchain to do so.

Ethereum (ETH) 2.0: Proof-of-Stake (POS)

One of the main reasons that Ethereum was unable to meet the booming demand was that it essentially copied Bitcoin’s proof-of-work approach.

With proof of work, miners compete to solve a complex cryptographic puzzle. The winner can then write a new block of transactions in the blockchain and claim the reward for doing so. This mining operation requires faster and faster computers, consumes huge amounts of electricity and … it takes TIME!

But in version 2.0, Ethereum should move from the slow method of proof of work to a much faster and more efficient approach to proof-of-stake.

It’s a bit like a lottery system. If you participate in Ethereum 2.0, every token you hold (ETH) looks like a lottery ticket. Having more tokens increases your chance to mine the next block and earn the rewards.

Again, nothing new under the sun. Second and third-generation blockchains are already using the proof-of-stake method and are doing so with some success. But Ethereum 2.0 will add new and valuable features.

Where can we get Ethereum (ETH)?

First Purchase

Buying Ethereum is not difficult. Here is our tutorial to help you explain how to buy Ethereum on the most secure sites.

The quickest and easiest way to buy Ethereum is through a trading platform that allows you to purchase Ethereum for Dollars, or even for other cryptocurrencies if you already have it.

There are many different trading platforms on the market, so as not to get lost in them, here are a few tips on the main points to observe before getting started:

  • Check the reputation of the exchange online.
  • Compare the fees
  • Verify if your payment process is available on the platform
  • Check if the platform requires KYC verification.
  • Verify if the change rates are not excessive

Here is a list of platforms where you can buy your first Ethereum:

Overall, we recommend avoiding payment by credit card. Commissions are very high (up to 10%). Bank transfer is the most cost-effective solution but will require a slightly longer validation process. It is also possible that your bank will block the transfer. It will then be necessary to ask you to sign a release stating that you are aware of the risks incurred for this investment.

Trade Ethereum

Ethereum can be traded on most cryptocurrency platforms such as those listed below. Many of these platforms are cryptocurrencies-only exchanges, and you might purchase your first cryptocurrencies before as explained in the paragraph above.

Conclusion

The second-biggest cryptocurrency offers many promises for the future. Despite the fact that Ethereum 2.0 was announced many months ago, the news doesn’t seem to be priced in. Moreover, Ethereum seems to be the pillar of each “hype” wave in cryptocurrencies (ICO, DeFi, NFT).

It’s all very exciting! But don’t expect instant gratification. Upgrading a public blockchain – especially one as popular as Ethereum – is an epic undertaking, akin to tackling the overhaul of motorcycle engines at the same time as their fairings, all on the highway.

In fact, the task is so daunting that legions of skeptics have doubted the possibility of implementing Ethereum 2.0. Criticisms that seem to be drying up today.