The Ethereum Platform: Redefining the Future of Technology and Finance
Until recently, building blockchain-based software was extremely complex, requiring a background in programming, cryptography, and mathematics. However, times have changed, thanks to Vitalik Buterin, the entrepreneur and chief developer of the Ethereum platform.
The Beginning
Vitalik Buterin is a 25-year-old Russian-Canadian prodigy behind the creation of Ethereum, a blockchain platform that has revolutionized the use of distributed ledger technology beyond just transferring value. At the age of 17, Vitalik was introduced to the world of Bitcoin and blockchain, and he quickly became fascinated. He founded the well-known Bitcoin Magazine and delved deep into the Bitcoin code and the secrets of digital currency.
As part of his research, Vitalik realized that blockchain technology could be used for other purposes besides simply transferring value, and he set out to create a platform that would enable the development and execution of smart contracts, decentralized applications, and programs that can communicate with one another. He left his studies at the University of Waterloo and won the famous Peter Thiel Fellowship, worth $100,000, to develop what we know today as Ethereum.
Vitalik’s vision is to create a “global computer” where people can develop and run software, and where these programs can communicate with one another seamlessly. Essentially, Vitalik is trying to usher in a new era of the internet.
Ethereum will be this new internet, and it will include a wide variety of programs that can communicate with one another through smart contracts. To put it simply, if Ethereum is the internet, then Bitcoin is just an email program. Bitcoin has one purpose, which is to serve as a means of transferring value, whereas Ethereum is seeking to fulfill a multitude of purposes.
Ethereum Supply: Exploring Ethereum’s Coin Emission Rate
As mentioned at the beginning of the article, Ethereum’s blockchain is based on a Proof of Work mechanism similar to Bitcoin, but on a different algorithmic version called Equihash (rather than SHA-256 as in Bitcoin). The difference between the two algorithm types is that while Bitcoin mainly uses computing power (CPU), Ethereum miners primarily use GPUs (the computer’s graphics processing unit).
In Ethereum’s blockchain, a new block joins the network on average every 15 seconds. For each signed block, the miner who mined it receives a reward of 2 ether coins, as well as all the gas (explained below) included in the block. Over time, the reward for mining a block will decrease, and the primary incentive for miners to continue mining will be gas fees.
In 2014, Vitalik Buterin raised $18 million for the project. In return for this money, he distributed 48 million ether coins to investors, and 12 million ether coins were taken for the development fund (for developers and contributors to the protocol). Today, there is a circulating supply of around 114 million ether coins, and there is no maximum quantity since ether serves as the “fuel” of the platform. However, there is a limitation of 18 million new coins per year.
Each unit of the digital currency ether is divided into 1,000,000,000,000,000,000 units called “wei”.
The Creators of Ethereum’s Cryptocurrency
Vitalik Buterin leads the development team behind Ethereum. Together with him, Dr. Gavin Wood, Joseph Lubin, Amir Chetrit, Anthony Di Iorio, and Jeffrey Wilcke founded Ethereum. Today, the Ethereum Foundation exists with brilliant minds from all over the world.
The Foundation is a non-profit organization based in Switzerland, and its goals are to continually develop the platform while relying on contributions.
How does Ethereum currency work?
Ethereum is an open-source platform based on blockchain technology. Vitalik began working on it in 2013, and in July 2015, it was released to the world.
The platform’s goal is to enable developers to build and implement decentralized applications (dApps) and decentralized autonomous organizations (DAOs) on it.
Smart contracts – a transition from the old world of cumbersome paper-based agreements to digital protocol-based smart agreements on the internet, to enable much more functionality, speed, and efficiency. It is highly recommended to read and understand the essence of smart contracts, as they are the main message of blockchain to the world.
Gas – The gas is the name given to the ‘fuel’ of the Ethereum EVM machine. It is the unit of work that the system uses to price the execution of code within the EVM. In other words, gas is the payment made to perform any action on the Ethereum network, and the payment for gas is made in units of the Ether currency.
The reason gas is necessary is that Ethereum has a wide range of smart contracts of varying sizes and complexities. Therefore, when miners include smart contracts in a block and use their computing power to execute them, it requires more effort from them. As a result, Ethereum developers realized they need to incentivize and reward miners according to the computing power they invest. For example, a connection operation between two values costs 3 gas, while a multiplication operation costs 5 gas.
As regular users, your interaction with gas is minimal. Wallets do all the work for you, so you won’t even know that you’ve sent gas, but simply see it as a transaction fee.
Advantages and Disadvantages of the Ethereum Currency
Advantages:
- Presentation of smart contracts to the world, and their possible use cases.
- A secure system that cannot crash (zero downtime).
- Initial Coin Offerings (ICOs) – a new way of fundraising based on smart contracts.
- A development team composed of top-level blockchain experts.
Disadvantages:
- Dependence on Vitalik Buterin – Vitalik is considered the central figure in the blockchain world today. Since the identity of Satoshi Nakamoto is unknown, Vitalik has stepped into his shoes as the face of the revolution. Although this has advantages at times, I chose to focus on the disadvantages for two main reasons. The first reason is that Ethereum is supposed to be a decentralized platform. Vitalik is portrayed as the leader of the platform, so he tends to dominate it heavily. The second reason is the implications of dependence on him. On June 25th, 2017, there was a rumor that Vitalik Buterin died in a car accident. As a result, $4 billion was wiped off the platform’s market value, which was reflected in a decline of about 15% in the currency.
- Solidity programming language – In order to program smart contracts on Ethereum, developers must learn a completely new programming language developed specifically for the platform, called Solidity, as part of the EVM. Today, there are already other platforms besides Ethereum that offer writing and coding of smart contracts in much more user-friendly programming languages such as Java and C#.
- Scalability – the ability to cope with growing demand. Ethereum has a lot of problems dealing with increased adoption. Due to the network structure, when there is a load, a big bottleneck is created in fees and inefficient distribution of computing power for the operation of smart contracts. As a result, fees for sending coins increase significantly, and transactions can take several days to pass (when there is a load).
- Centralization – given the fast pace of block creation and the volume of blockchain software, the Ethereum platform has become centralized, controlled by a small number of large mining pools that generate most of the blocks. This poses a risk to the decentralization and security of the platform.
Recommended Ethereum wallet
Ethereum is digital currency, which means there is a wide variety of wallets available for it. These are the recommended wallets:
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1)Hardware wallets – the most recommended wallets. A hardware wallet is an external hard drive that is currently the safest way to hold digital coins.
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