Ethereum

Eth-diamond-rainbow

Ethereum is a decentralized, open-source blockchain system that features smart contract functionality. It was proposed in late 2013 by programmer Vitalik Buterin and development was crowdfunded in 2014, with the network going live on 30 July 2015. Ethereum is the most actively used blockchain and is the second-largest cryptocurrency by market capitalization, after Bitcoin.

History

Ethereum was initially described in a white paper by Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, in late 2013 with a goal of building decentralized applications. Buterin argued that Bitcoin needed a scripting language for application development. Failing to gain agreement, he proposed the development of a new platform with a more general scripting language.

In January 2014, development work began and was crowdfunded through an initial coin offering (ICO) in August 2014, raising 3,700 BTC in its first 12 hours, equating to approximately $2.3 million at the time. The Ethereum network went live on 30 July 2015, with 72 million coins premined.

Technology

Ethereum's internal cryptocurrency, Ether (ETH), is used primarily for two purposes: as a digital currency like other cryptocurrencies and as "gas" to run applications and even monetize work. Ethereum's blockchain uses a Proof of Stake (PoS) consensus mechanism, transitioning from the original Proof of Work (PoW) mechanism through the Ethereum 2.0 upgrade.

Smart Contracts

A key feature of Ethereum is its support for smart contracts, which are self-executing contracts where the terms of the agreement are directly written into code. Smart contracts allow for the automation of complex processes and can be used for a variety of applications, from financial services to supply chain management.

Decentralized Applications (DApps)

Ethereum allows developers to create and deploy decentralized applications (DApps). These applications run on the Ethereum blockchain and are not controlled by any single entity, making them resistant to censorship and fraud.

Ethereum 2.0

Ethereum 2.0, also known as Eth2 or Serenity, is an upgrade to the Ethereum blockchain. The primary aim of the upgrade is to increase the network's scalability and security. Ethereum 2.0 introduces a new consensus mechanism called Proof of Stake (PoS) and shard chains, which are smaller chains that run in parallel to the main Ethereum chain, allowing for more transactions to be processed simultaneously.

Use Cases

Ethereum has a wide range of use cases, including but not limited to:

• Decentralized Finance (DeFi)
• Non-Fungible Tokens (NFTs)
• Supply chain management
• Gaming
• Identity management

Criticism and Challenges

Ethereum has faced several challenges and criticisms, including issues related to scalability, high transaction fees, and energy consumption (prior to the transition to PoS). The network has also been a target for various hacks and scams, leading to significant financial losses.

See Also

• Blockchain
• Cryptocurrency
• Bitcoin
• Smart contract
• Decentralized application
• Proof of Stake
• Proof of Work