Ethereum is an open source public blockchain platform with smart contract features. It provides a decentralized Ethereum virtual machine. The concept was first proposed by programmer Vitalik Buterin in 2013-2014 after being inspired by Bitcoin, which roughly translates to “the next generation of cryptocurrency and decentralized application platform.” The ETH cryptocurrency began to develop through a crowdfunding ICO that took place in 2014. As of February 2018. Ethereum is the second largest cryptocurrency in terms of market capitalization, just after Bitcoin.
Ethereum as a functional application
Ethereum is a platform that provides users with various modules to build an application. If building it is like building a house, then Ethereum provides modules such as walls, roofs, floors and so on. Users just need to build it like building blocks, so as a result, the cost and speed of application development has been greatly improved.
In particular, Ethereum builds applications using a complete Turing scripting language (Ethereum Virtual Machinecode, or EVM for short), which is similar to an assembly language. We know that programming directly in assembler is very complicated, but Ethereum can use languages such as C, Python, Lisp, etc., which are then converted to EVM using a compiler.
The aforementioned applications on the platform are actually contracts, which are the core of Ethereum. A contract is an automated agent that lives in the system. It has its own Ethereum address. When a user sends a transaction to the contract address, it is activated, and then according to the additional information in the transaction, it will run its own code and eventually return the result, which may be another transaction sent from the contract address.
It should be noted that a transaction in Ethereum is not just about sending Ether, it can also implement quite a lot of additional information. If a transaction is sent to a contract, this information is very important, as it will implement its own business logic based on this information. The business that this kind of contract can provide can be of any kind. The only limit is your imagination, as the complete Turing language provides full degrees of freedom, allowing users to create a variety of applications. The White Paper cites several examples of ETH applications, such as savings accounts, user-defined sub currencies, etc.
Ethereum – what is its history?
In late 2013, Vitalik Buterin, the founder of Ethereum, published the first White Paper of this cryptocurrency, launching the project. As of July 24, 2014. Ethereum ran a 42-day Ether pre-sale. In early 2016, Ethereum’s technology was appreciated by the market, and the price began to soar, attracting a large number of non-developers to enter the Ethereum world.
As a relatively new development using Bitcoin technology, Ethereum aims to deploy the digital technology globally to execute peer-to-peer contracts. Simply put, Ethereum is the world’s computer that cannot be turned off. The innovative combination of encryption architecture and Turing completeness can foster the emergence of many new industries. Conversely, traditional industries are under increasing pressure to innovate, and when they don’t, they risk being eliminated.
The Bitcoin network is really a collection of distributed databases, while Ethereum goes a step further. It can be considered a distributed computer: the blockchain is the ROM of the computer, the contract is the program, and Ethereum miners are responsible for the calculations, acting as the processor. This computer is not and cannot be used for free, otherwise anyone could store all kinds of junk information in it and perform all kinds of trivial calculations. To use it, among other things, you have to pay processing and storage fees.
The potential uses of smart contracts are many. Interestingly – more advanced software allows you to create online stores with Ethereum.
What is Ethereum for business?
Ethereum can be used to create decentralized programs, autonomous organizations and smart contracts, dozens of which are already available. Expected goals of the application include:
- smart grid,
- sports betting, and more.
Ethereum – advantages and disadvantages
Like any cryptocurrency, Ethereum has its benefits and drawbacks, which we write about below:
- Ethereum allows users to use a complete blockchain programming language to execute more complex smart contracts on the network without relying on third-party services.
- Ethereum can provide a strong ecosystem for other product platforms and services.
- Ethereum has a robust development plan (3-5 years), which means the community has clear standards for what to expect in the coming years
- There are many companies involved in improving the foundation beyond Ethereum. Between the Ethereum Enterprise Alliance (EEA) and the Hyperledger team approving its first Ethereum project, there are dozens of corporate organizations working to improve the Ethereum ecosystem. Other than Bitcoin, no other blockchain has received such strong support from the business community.
Disadvantages of Ethereum
- Because Ethereum is a platform, it will never work as well as other cryptocurrencies that are specifically designed for transactions.
- Some of Ethereum’s major improvements, due to its path, include moving PoW to PoS.
- The lack of tutorials or documentation to help programmers is a major obstacle to becoming an Ethereum programmer. Most of the tutorials you find are outdated or simply teach conceptual understanding.