You know, I am a big fan of Ethereum. I have been hodl-ing this coin for a very long time. Let me tell you a little bit about it. Hey, by the way, you might want to read my blockchain explanation guide before you continue further since, you know, ETH is basically the second most popular blockchain in the world.
Ether (ETH) was created in 2015 by Vitalik Buterin, a programmer with huge programming experience. He pitched his idea and eventually created Ethereum alongside a couple of other co-founders.
Ethereum is an open source blockchain platform which has similarities to Bitcoin (for example, both are using Proof-of-Work consensus algorithm), but also has differences such as its ability to create smart contracts natively.
In 2017, ETH had grown so much that it became one of the top 20 currencies by market cap, overtaking Ripple as well as Litecoin. In fact, ETH almost surpassed Bitcoin at one point despite eventually it did go lower again.
And despite ETH went to bear market cycle in 2018, just like every crypto out there at that time, it was able to go back up again in 2020-2021 bull market cycle.
Although there are more than 1,000 digital tokens listed on CoinMarketCap, only few projects are/were able to maintain their relevance in the long term. This shows how volatile the space can get sometimes, especially since some projects never manage to take off. As such, there are still plenty of opportunities left for new ideas.
This article aims to explain why Ethereum could become the standard protocol layer for all decentralized applications.
How Does Ethereum Work?
The way Ethereum works is through smart contracts. Smart contracts allow users to create their own custom tokens using Solidity programming language. These tokens can be used to pay for goods online without going through any financial institution. The contract stores data directly onto the network instead of keeping track of transactions externally.
When users send payments, they don’t go through intermediaries like banks or credit card companies. Instead, every transaction is broadcast across the entire network automatically.
Every computer connected to the internet has access to these updates. Since everyone has equal access, no single user can manipulate the system.
Because Ethereum uses public ledgers, anyone in possession of validators’ hardware can validate transactions and add blocks to the chain.
Each block contains information about previous ones to ensure security and consistency between multiple copies of the same ledger.
Why Will Ethereum Be Important For Our Future?
There are several reasons why Ethereum is important for the future. First, because of its high scalability. Second, due to its ability to run thousands of programs simultaneously compared to other platforms. Thirdly, thanks to its flexibility.
For example, right now Ethereum’s consensus is using Proof-of-Work but they are in the long-term process transitioning to Proof-of-Stake (PoS).
Transparency allows us to know exactly what happens behind the scenes and who controls certain functions within the network.
Due to the current PoW mechanism, currently Ethereum is only able to support 12-15 TPS. However, it is projected to surpass 100,000 TPS once Ethereum 2.0 (its transition to PoS) is fully adopted.
With Ethereum, users can store anything along with metadata and comments. They can even transfer ownership of assets iseconds and make sure asset integrity remains intact.
As mentioned earlier, Ethereum uses transparent consensus mechanisms. Users can easily understand how the system operates and trust it overall. Unlike traditional systems where miners decide everything, Ethereum’s governance mechanism involves voting on proposals made by community members.
If someone wants to propose something malicious, they won’t be able to implement it unless enough voters agree. Also, unlike other networks, Ethereum provides real time stats regarding gas usage, cost, and time spent on specific operations. You just need to use blockchain explorers to achieve this.
Since Ethereum is open source, it gives freedom to developers to customize it however they wish. There are numerous ways to build dApps on Ethereum. One can either develop software themselves, hire programmers willing to help, or ask experts to write libraries for them.
Furthermore, Ethereum doesn’t require developers to hold large amounts of Ether. Hence, individuals can start contributing towards building tools today while waiting for value creation later on. Finally, Ethereum offers a robust development environment with countless tutorials covering various aspects of decentralization. Anyone interested can learn quickly and efficiently.
One major advantage of Ethereum is that it is already strong enough to prevent 51% attacks. Since there are plenty of nodes already, and the numbers of validators don’t really decrease despite bear market, it is a certainty that Ethereum’s security will surpass most of the other major blockchains in the future.
Why Ethereum Will Be The Most Important Cryptocurrency
It’s hard to predict the future accurately, but I think Ethereum will be the biggest success story among all cryptocurrencies. I know this opinion might piss off some Bitcoin maximalists but hey this is just my opinion, right..
First, Ethereum is currently the world’s second largest currency by market cap. Secondly, Ethereum has been around for 6 years now. During this period, it has gone through multiple iterations. Despite its flaws, Ethereum itself has matured considerably. Now, Ethereum is capable of handling higher levels of traffic and processing huge volumes of requests. Most successful Dapps like Uniswap or Aave are still supporting Ethereum and probably will continue to do so for a long time.
Another important point, Ethereum enables developers to build solutions that impact millions of lives on a global scale. Its flexible nature allows users to choose whichever model suits their needs best. Since Ethereum is open source, many alternative chains fork Ethereum and use alternative consensus algorithm on top of Ethereum software. Some may prefer POA models (Proof of Authority), others might opt for DPOS (Delegated Proof of Stake), while others may choose POS (Proof of State).
Therefore, Ethereum’s versatility to help create other chains will surely attract new users looking to experiment with different options and find the right solution for their problem.
Last but not least, Ethereum is highly scalable and resilient against cyberattacks. Because of its open source nature, anyone can audit the underlying code. Thus, hackers targeting individual addresses aren’t likely to succeed. Anytime you hear someone getting hacked on Ethereum, usually it’s simply because that person gets his private key or backup phrase stolen.
Dapps that utilize Ethereum’s smart contract might also get hacked if there are some security loopholes on their smart contracts. But it doesn’t mean Ethereum blockchain itself get hacked. Ethereum is super safe at this stage.
Also don’t forget that the speed of Ethereum’s growth is unprecedented. Despite being relatively young, Ethereum is already functioning smoothly on hundreds of thousands of nodes worldwide.
Ethereum has very strong fundamentals and I have diamond hands. However, I do not recommend you to try to buy it right now since we might not have reached the bottom yet.