Quick Facts

Approximate Market Cap$380,333,722,963
Year Established2013
FounderVitalik Buterin
Symbol/AbbreviationETH
UtilityAsset

Satoshi Nakamoto presented two distinct conceptions when he originally established the Bitcoin blockchain. The first was the “Bitcoin”. A decentralized peer-to-peer online currency. The other was the idea of a blockchain based on proof of work. It enables the community to agree on the order of transactions.

What is Ethereum – Definition

Ethereum is a blockchain-based platform for creating and using decentralized applications. It represents an open-source programmable Blockchain. Its programming language’s name is Solidity. Ethereum users call its applications “dApps”.

Although Ethereum brings general computations to the blockchain, it still makes use of a “coin”.  “Ether” is the main internal crypto-fuel of Ethereum.

Users can store Ether into their account addresses, spend or receive as part of transactions or block generation. To run certain transactions, users must spend Ether. 

There are three types of applications on top of Ethereum:

  • Financial apps
  • Business apps
  • Entertainment apps

Pros and Cons

Pros

  • Decentralized
  • Smart contracts
  • Largest developer community

Cons

  • Scalability issues
  • Instability
  • Pending transactions

The History

Ethereum was conceptualized through a whitepaper published in November 2013 by Vitalik Buterin. The network launch was in June 2015.

There were four major stages planned for Ethereum’s development. Each step indicated an advancement.  

It began with the implementation of the basics. Users started mining Ether or operating smart contracts. Later the system had its upgrades. The infrastructure upgrade solved many issues about safety.

Today’s Ethereum 2.0 still works on new solutions. Its upgrades aim to address its scalability and sustainability.

How Ethereum Works

Ethereum was first outlined as a proof-of-concept ‘world computer’. Yet, its inventor had a different point of view. He believed that a digital currency with its Blockchain can offer much more than basic P2P electronic value transfer. 

Buterin created a new type of virtual ecosystem. This ecosystem featured a global Blockchain and smart contract programming platform.  

Ethereum’s programming capabilities are directly integrated into the Ethereum protocol. It allows developers all over the world to design a new class of decentralized applications. The apps are then hosted on a public blockchain with payment automation using Ether.

The key features of the Ethereum platform are:

  • Ethereum’s digital currency – Ether
  • Smart contracts
  • The primary programming – Solidity
  • Decentralized applications – dApps
  • Decentralized Autonomous Organizations DAOs
  • Platform’s mining rewards

Advantages & Disadvantages

Advantages

Decentralization

Following Bitcoin, Ethereum is the world’s most decentralized cryptocurrency.

Pioneering smart contract capability 

Ethereum was the first cryptocurrency network to include a platform for smart contracts.

Active developer community

Ethereum contains the largest global development community. This offers Ethereum a significant edge over most protocols.

Disadvantages

Scalability problems

Like many cryptocurrencies, Ethereum faces limitations in terms of scalability. 

Volatility with Smart Contracts 

Smart contract agreements could be challenging to cancel or reverse. Any vulnerabilities in the underlying code can weaken the network. 

Instability

The Ethereum blockchain is still facing significant modifications. This includes the transition of the consensus process from the PoW to the PoS system.

Ethereum in the Global Crypto Market

Ethereum initiated the second wave of innovation in blockchain technology. It seeks to be the leading smart contract-compatible digital currency platform. 

The Ethereum system has an extensive following of supporters. Its global network consists of users, developers, and enterprises. 

Ethereum holds its position as the second-largest network by market cap. Ether presently has a market value of around $330 billion. The entire trading volume of Ether (ETH) has hit $1.4 trillion.  

Ethereum’s hard improvements began last year. Their design will assist Ethereum in scaling and lowering its high expenses. This might launch it to previously unseen heights.

FAQ

What types of businesses use Ethereum?

The list of firms using Ethereum is diverse and covers a wide range of sectors. These include financial services, healthcare, insurance, retail, etc.

What are the different categories of “accounts” in Ethereum?

There are two: externally owned accounts (EOAs), that users use for keeping, sending, or receiving Ethe, and contract accounts that hold smart contracts which can be only activated by sending ETH into them.

What are the uses of a smart contract?

A smart contract is commonly used for multi-signature accounts or for managing financial agreements. It can be also used as a third party or as a data storage.