Introduction of Ethereum:
Ethereum is a digital currency which is utilized for operating smart contracts on the Ethereum network. Ethereum network and Ether tokens are decentralized as these are not controlled or issued by any central authority like banks, financial exchange or government. It is an open network that is managed by its users. Ethereum is used for participating in the global computational network. This activity is enhanced by the smart contracts that are scripts of code deployed in the Ethereum blockchain.
What is Ethereum?
Ethereum is an open-source, public, blockchain-based dispersed computing platform. It enables a decentralized Turing-complete virtual machine known as Ethereum Virtual Machine (EVM). The cryptocurrency token of Ethereum is known as “Ether”; it is used to transfer between accounts and utilized to compensate participant nodes for computations performed. The “Gas” is an internal transaction pricing mechanism which is used to decrease spam and allot resources on the network.
Ethereum was invented in the year 2013, by Vitalik Buterin who is a cryptocurrency researcher and programmer. Later it was developed by an online crowdsale which took place between July and August 2014. Finally, it came into existence on 30 July 2015 with 11.9 million coins which were “premined’ for the crowdsale. This premined coin account for around 13% of total circulating supply.
After DAO project got crashed in the year 2016, the Ethereum got divided into separate blockchains. The new parted version became Ethereum (ETH) and the original resembled as Ethereum Classic (ETC). The value of the Ethereum currency expands over 13,000 percent in 2017. “Ether” is used by application developers to pay as transaction fees and services on the Ethereum network.
Ethereum is a decentralized platform which is operated on smart contracts. It aims to function both as a decentralized internet and a decentralized app store. Ethereum supports a new type of application in the process. Ether is a digital bearer asset like a bond which is issued in its physical form. Ethereum doesn’t require the third party to process or approve a particular transaction. It provides “fuel” for the decentralized apps on the network.
Ethereum is an open software platform which is based on blockchain technology. It implements developers to build and deploy decentralized applications. It is distributed public blockchain network. Ethereum aims to abstruse bitcoin design so that the developers can create applications or agreements which have additional steps, new rules of ownership, alternative transaction formats or different ways to transfer state.
Ethereum virtual machine (EVM) is core innovation of Ethereum. It permits the user to run any program irrespective of the programming language allotted in given time and memory. The algorithm used for mining “Ether token” is called as “proof of work” or “Ethash.”
- In the year 2013, Ethereum was created by a programmer named Vitalik Buterin. He proposed the development of a new platform with a general scripting language.
- The Swiss company Gmbh develops first Ethereum software in the year 2014 and Ethereum launches a pre-sale of Ether tokens to the public.
- On July 30, 2015, Frontier the initial version of Ethereum was launched.
- In May 2016, Ethereum earned a notable media coverage when $150 was raised by DAO.
- In Nov 2016, Ethereum expanded its DDos, debloated the blockchain and trashed the spam attacks.
- In June 2017, Ethereum raises its value above $400 that records a 5001% rise since Jan 1st, 2017.
Advantages of Ethereum:
The Ethereum platform is used to design applications across several ranges of services and industries. The Ethereum is traded for bitcoin, dollars, euro, yen and other cryptocurrencies. This platform is used for proceeding speedy transactions, verifying identity and crowdfunding.
- Secure Transactions without any third party: – The “smart-contracts” of Ethereum is utilized for proceeding speedy transactions without involving third persons. All the transactions are recorded in computer code.
- Data storage: – Ethereum is utilized to store the data as it is decentralized. In coming days, it is difficult to construct data storage system that securely connects servers and provides faster data transfer. Therefore, Ethereum is going to the solution as it is blockchain technology which is utilized to encrypt and transfer data to millions of servers.
- The algorithm used in Ethereum called “Ethash’ rewards miners. This ensures that every miner is rewarded for work done. Usually, 5 ether is rewarded for each block mined.
- Ethereum allows users to create contracts and source for funds without the help of any centralized authority.
- The Ethereum clients can design and issue their own cryptocurrencies which are utilized to imitate virtual shares, assets, and exchanges.
Criticism of Ethereum:
As Ethereum is growing rapidly in the recent days, it has faced a lot of critics from the public. Some critics are mentioned below.
- Few leading members of Bitcoin community stated that “Ethereum network created new token ether (ETH), instead of finding a way to utilize existing bitcoins (BTC) as the unit for operating the prices”. This statement clearly shows the attitude of Bitcoin members towards Ethereum.
- Many Bitcoin holders were of the opinion that new crypto token can violate the spirit of Bitcoin’s original 21 million hard issuance limits. This shows the spirit of Bitcoin holders towards the currency.
- The biggest criticism of Ethereum was articulated by Vitalik Buterin as it lacks scalability. Ethereum has the potentiality to handle 5 transactions per second which are out of the capacity if Ethereum is going to function as the backbone of the Internet.
- Centralization is a bigger issue for Ethereum, as the ledger keeps the track of the balance. Ledger is secured on thousands of nodes instead of one centralized server. A wicked party can easily hack thousands of computers at the same time, instead of the single server. The ledger of Ethereum is secured as it is decentralized.
- Smart contracts are widely praised, but these have few disadvantages such as
- A hacker stole $50 million from the original DAO due to the bad coding that was written on the blockchain.
- Another issue is immutability as the smart contract can have few errors in it.
- The social context is ignored by smart contract on which it is operated.
- These smart contracts also have few legal questions which are referred by a code law.