Ethereum The Smart Contract Revolution

#ethereum #eth

Ethereum ETH

The founder of Ethereum ETH at the beginning, was inspired by Bitcoin, but wanted to build a more versatile blockchain platform

Content:

Ethereum was originally proposed by Vitalik Buterin, a Russian-Canadian programmer, who in 2013 published a white paper outlining his vision for a new blockchain platform capable of supporting smart contracts and decentralized applications.

In 2014, Buterin co-founded Ethereum with seven other key figures-Gavin Wood, Charles Hoskinson, Mihai Alisie, Jeffrey Wilcke, Anthony Di Iorio, Amir Chetrit, and Joseph Lubin. The Ethereum project grew to include these co-founders, all of whom played a significant role in bringing Buterin's vision to life.

Some key facts about the origins of Ethereum

In 2013, Buterin published a whitepaper outlining his idea for a new blockchain platform that could support smart contracts and decentralized applications. This attracted the attention of several talented developers who contacted Buterin to help him realize his vision.

In 2014, the Ethereum Foundation raised about $18 million in Bitcoin through an ICO to fund the development. The ICO attracted the first investors and established Ethereum as a serious contender in the cryptocurrency space.

Then, in July 2015, under the codename “Frontier,” Ethereum was officially launched, with 72 million Ether tokens minted and distributed to investors who funded the project. This marked the beginning of a new era in online transactions, offering more possibilities to blockchain technology through Smart Contracts and Dapps, using a proof-of-work consensus mechanism.

However, Ethereum faced challenges in the beginning, most notably the hacking of DAO in 2016, in which $50 million worth of Ether was stolen, leading to a split in the Ethereum community. Despite this setback, Ethereum's resilience and community response demonstrated commitment to the development and security of the platform.

Overall, the creation of Ethereum has been met with enthusiasm and optimism, positioning it as an innovative platform for decentralized applications and smart contracts within the cryptocurrency ecosystem.

The initial development of Ethereum was led by Buterin, Wood (who created the Solidity programming language) andHoskinson.

Although Vitalik Buterin is considered the founder and public figure of Ethereum, the blockchain is now an open-source project managed by a decentralized global community of developers. No single entity controls or owns Ethereum.

The Ethereum team

Ethereum's founders came together through a combination of shared interests and ties and Vitalik Buterin's original vision for the project.

The founding team initially included:

- Vitalik Buterin

- Gavin Wood

- Charles Hoskinson

- Mihai Alisie

- Jeffrey Wilcke

- Anthony Di Iorio

- Amir Chetrit

- Joseph Lubin

All of these people played key roles in the initial development of Ethereum: Wood created the first Ethereum network, Hoskinson briefly served as CEO, and Lubin co-founded the Ethereum Foundation.

In 2014, the Ethereum project grew to include the eight co-founders listed above. Together they raised about $18 million in Bitcoin through an ICO to fund development.

However, disagreements over the project's open-source, nonprofit structure led to some early departures, such as Hoskinson's in 2014. Over time, Buterin emerged as the most prominent public face of Ethereum.

The initial development of Ethereum was led by Buterin, Wood (who created the Solidity programming language) and Hoskinson.

While Vitalik Buterin is considered the founder and public figure of Ethereum, the blockchain is now an open-source project managed by a decentralized global community of developers.

Analysis of the Ethereum White Paper

The Ethereum white paper, published in 2013 by Vitalik Buterin, is a foundational document that outlines the vision and technical details of the Ethereum blockchain platform. It is considered a living document that has evolved over time, with additions and updates reflecting the growth and development of the Ethereum ecosystem.

Key features and concepts of the Ethereum white paper

The Ethereum white paper introduces several key concepts that have become central to the platform's functionality and appeal:

Smart Contracts

The Ethereum platform enables the creation and execution of smart contracts, which are self-executing agreements written in code.

Decentralized applications (DApps)

Ethereum enables the development and distribution of decentralized applications that operate on a network of peer-to-peer nodes, promoting transparency and decentralization.

Full Turing programming language

The Ethereum blockchain features a Turing-complete programming language, which allows developers to write arbitrary rules for ownership, transaction formats and state transition functions.

Scalability, standardization and interoperability

Ethereum aims to offer scalability, standardization, feature completeness, ease of development and interoperability, making it a versatile platform for decentralized applications.

Impact and significance

Ethereum's white paper has had a profound impact on the development of blockchain technology and the broader cryptocurrency ecosystem:

Beyond Bitcoin

Ethereum has served to realize the broader potential of blockchain technology beyond Bitcoin and first-generation decentralized applications, opening up a world of unimagined possibilities.

Decentralized revolution

Ethereum's platform has enabled the creation of a wide range of decentralized applications, from token and financial derivatives systems to identity and reputation systems, further expanding the efficiency and use cases of blockchain technology.

Evolution of Ethereum

The Ethereum white paper has undergone updates and revisions since its initial publication, reflecting the evolution of the Ethereum ecosystem and the continued development of its technology. The paper remains a useful reference and an accurate representation of Ethereum's vision.

Ether token: Understanding the utility and value of the initial offering - The main utility of the

token

Ether (ETH) is the native cryptocurrency on the Ethereum blockchain and has several key utilities that contribute to its value:

Paying transaction fees

Ether is needed to pay transaction fees, known as “gas,” on the Ethereum network. Users must pay fees in ETH to execute smart contracts and interact with decentralized applications (dApps).

Network protection

Ether is used in the proof-of-stake (PoS) consensus mechanism to protect the Ethereum blockchain. Validators point their ETH to participate in the validation process and earn rewards.

Enabling smart contracts

Ether powers the execution of smart contracts on the Ethereum virtual machine (EVM). Smart contracts are self-executing agreements that facilitate the creation of dApps.

Facilitating decentralized applications

Ether enables the development and operation of decentralized applications (dApps) on the Ethereum network. dApps use smart contracts to provide a wide range of services, from decentralized finance (DeFi) to non-fungible tokens (NFTs).

As a store of value

As the second largest cryptocurrency by market capitalization after Bitcoin, Ether is increasingly seen as a store of value and a hedge against inflation.

Enabling token creation

Ethereum's ERC-20 token standard enables developers to create new tokens that can be used for various purposes, such as utility tokens, security tokens and governance tokens.

The demand for Ether is driven by its utility in powering the Ethereum network and its growing ecosystem of decentralized applications. As more developers build on Ethereum and more users interact with dApps, demand for ETH is expected to increase, potentially driving up its value over time.

Staking on Ethereum

Staking on Ethereum involves locking Ether (ETH) to participate in the validation process on the Ethereum blockchain network and earn rewards. Here is how Ether staking works:

1. Validator participation: To become a validator on the Ethereum network, users must stake a minimum of 32 ETH by depositing them into the network. Validators play a crucial role in the Proof of Stake (PoS) consensus mechanism by validating transactions, creating new blocks and monitoring the network for malicious activity.

2. Network protection: Validators are responsible for confirming transactions, verifying the validity of new blocks, and adding blocks to the Beacon Chain, Ethereum's new consensus model. By actively participating in the network, validators help protect the blockchain and maintain its integrity.

3. Earning rewards: Validators receive rewards in the form of newly minted ETH for their active participation in the network. Rewards are distributed based on the amount of ETH pointed to and the validator's contribution to the security of the network and the consensus mechanism.

4. Staking methods: There are several ways to stake Ethereum, including solo staking, staking as a service (SaaS), and pooled staking. Solo staking involves managing and maintaining an Ethereum node independently, while staking as a service allows users to delegate node operations to a third-party service provider. Pooled staking involves multiple users contributing ETH together to meet the 32 ETH deposit requirement.

5. Activation and rewards: Validators must wait a certain period, typically four epochs, before becoming active validators and earning rewards. The time to activate as a validator depends on factors such as the number of validators in the queue and the demand for staking. Rewards earned by staking are deposited in the user's Ethereum wallet and can be withdrawn or reset.

In general, staking in Ethereum is a process that involves contributing to the security of the network, earning rewards for validating transactions, and actively participating in the consensus mechanism through the PoS protocol.

How can I start staking in Ethereum

Here are the steps to start staking on Ethereum:

1. Choose a staking method:

(a) Solo staking: Requires running your own validator node with a minimum of 32 ETH. Offers the highest rewards but is technically complex.

(b) Betting pool: Participate in a pool with any amount of ETH. Rewards are distributed according to pool rules. Some pools lock ETH into a smart contract and offer an ERC20 token representing it.

(c) Staking-as-a-service: Delegate your ETH to a service provider. This is the simplest option, but requires trust in the provider.

2. Configure the staking environment

( a) For solo staking, you will need to configure an Ethereum node with an execution layer (EL) client and a consensus layer (CL) client.

(b) For staking pools and services, you can simply deposit your ETH in their platform. They will take care of the technical configuration and node management.

3. Depositing ETH

(a) For solo staking, you must deposit exactly 32 ETH in the Ethereum staking contract.

(b) For pools and services, the minimum deposit is usually much lower, sometimes as low as 0.01 ETH.

4. Wait for activation

(a) After depositing, you enter an activation queue. It can take several hours to weeks to become an active validator, depending on the application.

( b) During this time, you still do not earn rewards. Once activated, you begin to receive wagering rewards.

5. Monitoring and configuration maintenance

(a) For solo staking, you must monitor the performance of your node, update the software, and manage potential forks and problems.

(b) For pools and services, they will maintain and operate the staking node.

6. Withdraw the staked ETH

(a) When you want to withdraw your staked ETH, you must initiate an unstaking process. This requires a waiting period of at least 4 epochs (about 26 minutes).

(b) After the waiting period, the unstaked ETH will enter an exit queue before being fully withdrawn. The actual withdrawal time depends on the network demand.

The best wagering method depends on one's availability , technical skills, and ability to tolerate risk. Solo wagers offer the highest rewards but require more commitment, while pools and services are easier but require the trust of a third party.

Rewards for staking participants

Ethereum staking allows users to be rewarded for their contributions to network security and transaction validation. The distribution of these rewards depends on the amount of Ether (ETH) committed and the length of the staking period.

As players in the Proof of Stake (PoS) consensus process, validators are rewarded with newly created ETH for their work in processing transactions, building new blocks, and maintaining network security and integrity.

Validators receive a portion of these benefits based on the amount of their stakes and their involvement in the network. Payouts are a mix of native block rewards and transaction fees. Stake rewards encourage users to actively participate in the staking process so that they can stake Ethereum and receive passive money.

Historical minimum and maximum values of Ether (ETH)

ETH price today 5/14/24 2885.00 USD

Market cap 346,513,457,072,685 USD

Outstanding bid: 120,114,987 ETH

Historical high: 4891.70 USD 16/11/2021

Historical low: 0.4209 USD 21/10/2015

The initial ICO price of Ether (ETH) was 0.31 USD

Total bid of ETH

ETH Total supply: 120,114,987 ETH (with a maximum issuance rate of 18 million ETH per year).

Block rewards, which are now 2 ETH per block plus tips, grow the total supply each year.

The future issuance rate could decrease as a result of changes such as EIP-1559, which burns a portion of ETH per block.

In conclusion, although the total amount of ETH increases each year, this increase is limited and predictable, depending on the block rewards. Each year, the supply will not fluctuate significantly or erratically. Monetary policy is intended to be constant and open.

Ethereum Successful collaborations

Ethereum has established a number of fruitful collaborations that have contributed to its expansion and user base. Here are some notable cases:

1. Microsoft: Microsoft partnered with Ethereum in 2015 to provide Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure, the company's cloud computing platform. Through this collaboration, companies can use Ethereum to create and deploy blockchain-based applications on Azure.

2. JP Morgan: JP Morgan and Ethereum collaborated in 2016 to create Quorum, an enterprise-focused version of Ethereum for financial institutions. Quorum offers better permissioning and privacy features while maintaining compatibility with Ethereum.

3. The Enterprise Ethereum Alliance (EEA) is a group of companies, startups, academics and technology providers formed in 2017 with the goal of promoting the use of Ethereum blockchain technology in the workplace. Members include Microsoft, JP Morgan, Accenture, and numerous other well-known companies.

4. Consensys: Joseph Lubin, co-founder of Ethereum, launched Consensys, a blockchain software company that has been instrumental in the growth and adoption of Ethereum. In addition to Ethereum, Consensys has developed a number of tools and applications, such as the well-known Ethereum wallet and the MetaMask browser plugin.

5. Decentralized Finance (DeFi ): The rapidly expanding decentralized finance ecosystem is based on Ethereum. Decentralized finance (DeFi) applications developed on Ethereum, such as yield-growing protocols, decentralized exchanges, and lending platforms, have attracted great interest.

These collaborations have helped Ethereum expand its market penetration, improve its technology, and promote acceptance in a range of industries, particularly finance and enterprise blockchain.

Companies that have developed on the Ethereum blockchain

1. Overstock.com: Based on the Ethereum blockchain, Overstock.com is an online store that has adopted blockchain technology.

2. Travala: Travala is an online travel agency that conducts its business on the Ethereum network.

3. Snel.com: This hosting company offers services that include Ethereum blockchain technology.

4. GameStop: The well-known video game store has integrated Ethereum and blockchain technology into its NFT marketplace and business processes.

5. Loopring: Based on Ethereum, Loopring is a layer 2 protocol that provides NFT minting capabilities and operates as a decentralized exchange.

6. Ernst & Young and SAP: These companies have worked with the Ethereum platform to test and implement blockchain solutions.

These companies, which have used the Ethereum blockchain for a variety of applications and solutions, span a broad spectrum of industries, from gaming and hosting services to e-commerce and travel.

Has the advent of the Layer 2 technology solution changed Ethereum?

Layer 2 is a collateral blockchain on which transactions are recorded that will at a time be transcribed to Layer 1 by updating it. In this way, Ethereum has overcome the scalability problems arising from Layer 1, which is similar to Bitcoin.

The advent of Layer 2 solutions has fundamentally changed Ethereum, providing crucial scalability improvements that enable the network to handle increasing demand and usage.

Some of the key ways in which Layer 2 solutions are transforming Ethereum:

Increased transactions per second (TPS): Layer 2 networks such as Polygon, Optimism, and Arbitrum can process transactions much faster off the chain, reducing congestion on Ethereum's mainnet.

Reduced gas fees: Layer 2 solutions significantly reduce user fees by handling transactions outside the main chain. This makes Ethereum more accessible and useful for a greater variety of users and applications.

Enabling creative applications: Layer 2's scalability improvements make it possible to create new types of decentralized applications on Ethereum that were previously impractical due to their expensive and slow development.

Attract users and liquidity: The need for these scalability solutions is evident from the much higher usage of protocols such as Aave and SushiSwap on Layer 2 networks compared to Ethereum's mainnet.

Important for long-term growth: Ethereum needs Layer 2 to scale and support the expanding ecosystem of NFT, decentralized finance, and other blockchain applications.

Although Ethereum 2.0 upgrades will also contribute to scalability, Layer 2 solutions are a crucial component of the roadmap to improve Ethereum's efficiency and sustainability and are already producing clear benefits. The rapid rise of the Layer 2 TVL to over $16 billion indicates that the technology is already having a significant influence.

Ethereum Layer 3

Layer 3 represents the continuing quest for scalability, effectiveness and utility of blockchain technology. It is an excellent illustration of the dynamic nature of this industry and the ongoing search for solutions that could lead to a highly user-friendly, scalable and interoperable blockchain ecosystem in the future.

Level 3 technologies offer more specific functions or sophisticated capabilities to mitigate some of the drawbacks of Level 2.

Specialized services: Layer 3 may offer private transactions or dApp capabilities that Layer 2 may not be able to adequately support.

Cross-chain interoperability: Layer 3's ability to facilitate seamless interactions between different blockchain networks, improving ecosystem interoperability, is one of the most relevant aspects.

Who are Ethereum's rivals?

Consensys is a developer of web3 and blockchain software platforms. It was founded in 2014 as a unicorn startup.

From a scalability perspective, Solana is a blockchain-based decentralized financial network (DeFi) that rivals Ethereum.

Polkadot is a blockchain interoperability protocol that seeks to connect different blockchains, particularly Ethereum.

Avalanche is a smart contract blockchain introduced in 2020. It achieves high speed and low cost through a special consensus mechanism called Avalanche.

Binance Chain (BSC) : Binance's blockchain infrastructure, which is compatible with Ethereum's virtual machine (EVM), offers cheaper fees and faster transaction times than Ethereum.

Although these projects aim to provide alternatives to Ethereum and address some of its limitations, Ethereum remains the second largest cryptocurrency by market capitalization and the most widely used blockchain for decentralized applications and smart contracts.

Ethereum Frequently Asked Questions FAQ

Here are 14 frequently asked questions about Ethereum with answers:

What is Ethereum?

Ethereum is a decentralized, open-source blockchain platform that enables the creation and execution of smart contracts and decentralized applications (dApps).

What is Ether (ETH)?

Ether is the native cryptocurrency of the Ethereum network. It is used to pay transaction fees and computational resources on the Ethereum platform.

How does Ethereum work?

Ethereum uses volunteer-managed nodes to verify transactions and execute smart contracts on the Ethereum Virtual Machine (EVM). The EVM executes smart contracts written in languages such as Solidity.

What is an Ethereum block?

An Ethereum block is a collection of transactions that has been transmitted to the network. Ethereum currently uses Proof of Work to verify blocks.

What is an Ethereum smart contract?

A smart contract is a self-executing program encoded for a specific purpose on the Ethereum blockchain. Smart contracts find application in finance, supply chain management and other areas.

What is an Ethereum client?

An Ethereum client is a software application that implements the Ethereum specification to interact with the network, execute smart contracts and manage digital assets.

How can I earn Ether (ETH)?

You can earn ETH by trading cryptocurrencies on exchanges, working as a freelancer on platforms such as Bounties Network, or by mining Ethereum and supporting the network.

How long does it take to transfer Ether?

Ethereum confirmation times vary depending on gas prices and network conditions. You can check median wait times on sites such as ethgasstation.info.

What is the gas limit in Ethereum?

The gas limit is the maximum amount of gas (payment) a user is willing to spend to complete a transaction. By setting the limit too low, transactions can fail.

What is Ethereum encoded in?

Ethereum smart contracts are encoded in high-level languages such as Solidity, Serpent, LLL and Mutan that address the Ethereum virtual machine. The Ethereum protocol itself is developed in various languages, including C++, Python, Ruby, Go, Java and Rust.

What is the difference between Ethereum 1.0 and Ethereum 2.0?

The main differences are the consensus mechanism (Proof of Work vs. Proof of Stake) and the addition of shard chains in Ethereum 2.0 to improve scalability.

What is the roadmap for Ethereum 2.0?

Ethereum 2.0 is being deployed in phases, starting with the Beacon Chain in December 2020, which introduced Proof of Stake. Future phases will add shard chains and merge Ethereum 1.0 into the new network.

Can I mine Ethereum on Linux?

Yes, there are many Ethereum mining clients available for Linux.

How to buy Ethereum with a credit card?

You can buy Ethereum on exchanges by entering your credit card information, the amount of ETH to be purchased and confirming the transaction.


Back

Loading...