You might have heard that Ethereum shares some qualities with Bitcoin – and in a sense, you’d be completely right. However, the second-largest cryptocurrency by market cap is more than just a digital currency – it’s a blockchain platform that other applications can use and build on (making it more similar to NEO than bitcoin).
So what is Ethereum?
First of all, Ethereum is open-source and free for you to create and develop decentralized applications on. dApps allow transactions and agreements to be made in a trustless manner without needing to rely on the other person. dApps also remove the need for a middle man or escrow to ensure that both parties get what they want.
One example would be you sending money from account A to account B without the use of a bank, or to bypass an auditor when drawing up a sales contract. All of these things and more are capable when people utilize the power of decentralized applications and what are called smart contracts.
Ethereum operates globally and can be thought of as a giant “supercomputer” that’s designed to run applications. The network puts together and executes smart contracts that are safe from third-party interference and censorship.
Smart contracts are resistant to fraud and manipulation as you and anyone else can see what the contract does and where money is sent. The contracts themselves are also self-executing, which is similar to any other automated service.
Ethereum’s price and Market Cap
Ethereum is presently ranked 2 out of all cryptocurrencies. Its current price is $ 185.57 with a marketcap of $ 19,917,948,189.
What’s the difference between Ethereum and Corporations like Facebook or Google?
You might be wondering what the difference is between the two powerhouses Google and Facebook and their approach to storing data and how Ethereum fits into all of this.
The answer is that these massive corporations store your data in data warehouses while Ethereum is distributed across the world. This means that if your information were to breached while on a Google or Facebook server, your information would be most at risk.
Ethereum’s approach is to disburse your personal data throughout the world thereby eliminating a single point of attack or failure.
What Is Ether?
Like any network, keeping it alive and operational costs money and consumes vast amounts of electricity.
To address this problem, Ethereum created a cryptocurrency named Ether in order to help programmers run the protocol on their personal computers. Programmers are then rewarded in Ether tokens for contributing network resources and making improvements to the Ethereum network.
Similar to how bitcoin miners are rewarded for maintaining the bitcoin network, Ethereum developers are paid in Ether to launch smart contracts on the Ethereum platform.
Ether made its way to the scene on July 14 as an initial coin offering (ICO). At the time, the coins were sold for just 40 cents each. Ether would later peak in 2017 at $1,417.38 in 2017 according to CoinMarketCap.
Why Was Ethereum Founded?
Ethereum was founded by a person named Vitalik Buterin, a Russian-canadian student and entrepreneur. His vision was to decentralize everything: from companies, currencies, and even countries with “unchangeable constitutions.”
Although this line of thinking could be extreme, Buterin apparently wanted to give control back into the hands of individuals and away from the world’s banks and centralized power brokers.
Buterin released his whitepaper for Ethereum in 2013 and was consequently awarded the Thiel Fellowship for his work along with $100,000.
His ideas also inspired other developers such as Dr. Gavin Wood and Joseph Lubin who joined Buter in a crowdfunding project which started in July 2014.
During the crowdsale, Ethereum raised a total of $18 million – which was the most successful ICO of that time.
Ethereum’s Scope and Disadvantages
Ethereum is built on blockchin technology, which is a series of cryptographic and secure public records which are resistant to change and tampering.
Anyone can create a contract or register a security using the Ethereum blockchain. These processes are “trustless” in the sense that they remove the counterparty or “middleman” risk as the contract is designed to self-execute without human intervention.
Due to Ethereum’s size and scope, the platforms main problems are its speed and storage. The Ethereum network’s total number of transactions per second according to Coindesk is 15 – much lower than its credit card counterparts.
Due to these constraints, many users have complained of bottlenecks and low speeds when using the platform.
A recent report citing sources close to the project said ethereum developers are discussing an upgrade that could boost the technology’s capabilities. The update, known as “ethereum 1x” is expected to potentially be rolled out some time in 2019, and includes changes to help accelerate the ethereum blockchain’s growth.
For any changes to be made to the platform, there must be a distributed consensus among the software users, but perhaps the update will be welcome if it addresses the ethereum platform’s greatest shortcomings.
The regulatory landscape of Ethereum
Ether has been subject of numerous regulatory concerns since its inception.
Notably, the United States Securities and Exchange Commission questioned if Ethereum should be treated as a security. This news came as other bad news for the industry as a whole as SEC investigations continue into the legality of virtual currencies.
And it’s not just the Feds that have been putting on the pressure. The coin has achieved criticism from banks, brokerages and economists — all of which have had a negative short-term outlook for the cryptocurrency.
To give you some examples:The Bank of International Settlement, a group of international financial institutions gave cryptocurrencies (and notably Ethereum) a scathing review on its “shortcomings,” stating that it is no position to scale over the long-term. Other critics have pointed out that crypto cannot and will not compete with fiat currencies once central banks issue their own digital tokens. But the main problem, perhaps, is that it takes a lot for the average person to grasp the idea of cryptocurrencies.