Developers guide to Ethereum, for beginners:
After hearing Cryptocurrency three things that come to mind are Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP). These have been top cryptocurrencies to date.
In this blog, we will discuss the world’s second-biggest Cryptocurrency Ethereum (Eth).
Is Ethereum like Bitcoin?
People believe that Ethereum is just like Bitcoin. Well, it’s not entirely correct. Ethereum is the Cryptocurrency platform which studied Bitcoin Technology and expanded its capabilities.
In simple words, Ethereum is an open-source software platform that allows users to build and launch Decentralized Applications (DApps).
Bitcoin and Ethereum are similar to each other in some aspects. Like, Bitcoin was solely created for just one purpose which is to make Digital Payments whereas Ethereum is not only used as Digital currency but it also provides a platform for decentralized applications to be built using its blockchain.
When you mine Ethereum, you get Ether which is used as the fuel to run Ethereum blockchain technology. Ether is also used by developers to pay the fees of smart contracts.
What is Smart Contract?
Before going into deep explanation let’s try to explain it to you using an example, suppose you want to sell your house. This process is intimidating and complicated as the process involves a lot of paperwork, communication with many different firms and people with a lot of risk factors.
To overcome this process sellers usually hire an estate agent. That agency does all the work that will be the filing of your paperwork or marking the price of your property they do all of it. The agency stays with you from the starting till the end until the property is sold. When the property is sold the agency gets a percentage of share that may be from 3-5% which agency gets from both ends from seller and buyer. This amount is a substantial loss to the buyer and seller.
Smart contracts can come really handy in such cases which exempts you from paying that extra percentage. They make the work less burdened and create trust between both parties as they use escrow service.
In technical terms, we can say-
Smart contracts are the sets of rules, regulations and penalties for an agreement. They are similar to the traditional contracts, but the only difference is that they automatically enforce the rules and obligations once the contract is executed.
Who created Ethereum?
The uncanny mind that built Ethereum is Vitalik Buterin, in late 2013. At age 17 Vitalik heard about bitcoin from his father. He is co-founder of Bitcoin Magazine in which he used to write blogs until mid-2014. Since Ethereum launched Vitalik has achieved a lot of featuring in magazines like Fortune 40 under 40, Forbes 30 under 30. Vitalik has an Honorary doctorate from the University of Basel in 2018.
Vitalik has a net worth of $100 million but this all could have been different if he had accepted google’s offer.
He Described all his idea on whitepapers and sent it to his friends, who in return passed it further. As a result, more than 30 people reached out to Vitalik Buterin to explain to them, the idea. He wanted people to figure out his mistakes or concept which wasn’t included, but it never happened.
In January 2014 the project was publicly announced, with core members consisting of Vitalik Buterin, Anthony Di Iorio, Mihai Alisie, Charles Hoskinson, Gavin Wood and Joe Lubin.
Does Ethereum have the potential to surpass Bitcoin?
We know a lot of you must be thinking about this topic, so let’s clear your doubt about it. Ethereum can never surpass Bitcoin but it can reach 30% of bitcoin’s value. In simple words, it can reach a maximum of 0.3 BTC. This does not mean that the Ethereum price won’t rise later on. Instead, Ethereum will then rise in dollars as far as bitcoin has the potential to rise in fiat.
ETH all-time high was $1,432.88 USD(Jan 13, 2018) and all-time low was $0.420897 USD(Oct 21, 2015).
Ethereum ranked #2 on coinmarketcap with a total market cap of $35,580,641,671 USD.
What Is Ether? Is it a Cryptocurrency?
Ether doesn’t require a third party to process the payment as it is a digital bearer asset. However, it doesn’t only operate as a digital currency, it also acts as ‘fuel/gas’ for the decentralized apps within the network. If a user wants to change something in one of the apps within the Ethereum network, they need to pay a transaction fee so that the network can process the change.
The transaction fees are automatically calculated based on how much ‘fuel’ an action requires. The amount of required fuel is calculated based on how much computing power is necessary and how long it will take to run.
Advantages of Ethereum-
- Uses all the properties of Blockchain technology-
Third-party interventions can’t be seen here as it is completely immune to those, which means it can’t be controlled by anyone at all which includes Decentralised apps and DAOs deployment within the network.
- It is far away from corruption and frauds-
It makes the network tamper-proof as all Blockchain networks are formed on one principle which is it requires a majority of opinions meaning when a change is made within it then all the nodes within the system need to agree on that.
- Single point failure is not possible –
as the whole platform is Decentralised. That means all the apps which always stay alive(online) and never switch off.
This all makes the Ethereum network protected from almost all the hacking attacks and all Fraudulent activities.
Disadvantages of Ethereum-
History has witnessed that where it is good, bad comes along. The same happened with the Ethereum network.
- Decentralized apps are not impeccable as smart contract code is written by humans, so smart contracts are as good as the people who write them. Any mistake in code might get exploited as there is always room for human errors. If this happens there is no direct way to stop a hacker attack or exploitation of said mistake which is hard as they would have to rewrite underlying code by reaching the consensus.
- Another major setback for Ethereum is Scalability–
In the fast-growing world, everyone wants micropayment to happen in a matter of time but with the Ethereum network, this isn’t the case. After so many years of its launch, this issue hasn’t been resolved. Just like bitcoin processes only 7 TPS, Ethereum network at present processes 15-20 transactions per second (TPS), whereas it’s current market competitors like visa process 45000 TPS.
Fast Fact- In 2016 there has been an attack since the Ethereum network was launched which was on ‘DAO’ (Decentralised Autonomous Organisation). In that attack, more than 3.6 Million Ether was stolen. This all happened because the hacker exploited a human error which was a ‘Recursive call bug’, which drained the funds from DAO into a ‘child DAO’ having a similar structure as DAO. This attack shock Ether users and the price of Ether fell from $20 to $13.