At the 2013 North American Bitcoin Conference, Vitalik Buterin introduced Ethereum as a decentralized and open-source blockchain project that enables the execution of smart applications on the blockchain. The Ethereum infrastructure has enabled the creation of numerous token specifications, including ERC-20 and ERC-721, and Ethereum is the native cryptocurrency of the Ethereum blockchain (ETH).
After Bitcoin, Ethereum is a blockchain project that enables the creation of smart contracts on the network. Since its announcement in 2014, the Ethereum project has grown rapidly, spawning numerous new cryptocurrency sectors and tokens.
Along the way, the Ethereum project has encountered numerous obstacles and the emergence of many new sectors. The ability to create smart contracts on the Ethereum blockchain has triggered the trend towards decentralized finance and contributed to the expansion of this industry.
In September 2022, the Ethereum project switched from the proof-of-work method to the proof-of-stake algorithm. This process, known as Ethereum Merge, is the first step in making the Ethereum project more scalable, faster, cheaper, and decentralized.
How is Ethereum implemented?
Ethereum operates in a globally decentralized manner, with individuals acting as “nodes,” as opposed to Bitcoin’s centralized server. This way of operating makes the blockchain network decentralized and highly resistant to attacks. So if one node in the Ethereum blockchain goes down, other nodes can keep the system running.
Ethereum is a decentralized network that runs a computer known as the Ethereum Virtual Machine (EVM). Each validator that installs a node on the Ethereum blockchain contributes to decentralization and keeps a copy of all network transactions. These copies, stored by different people, can be updated and synchronized after each block.
Actions on the network are called “transactions” and are stored in blocks on the Ethereum blockchain. Before these blocks are connected to the network, verifiers check the transaction history and records for accuracy. On the blockchain, the proof-of-stake method is used to establish consensus on the legitimacy of transactions. To become a Validator Node, at least 32 ETH must be locked using this algorithm. Once 32 ETH are locked, the blockchain synchronizes with the network and blocks can be added.
What exactly is ERC-20?
ERC-20 is a token creation standard used on the Ethereum blockchain. The ERC-20 standard was proposed by Ethereum developer Fabian Vogelsteller in 2015 and forms the basis for various regulations, such as how a token will work in the Ethereum ecosystem and how much of it will be available. ERC-20 is a standard that sets the basic criteria for creating tokens with the same characteristics on the Ethereum blockchain.
Strong developer community Advantages of Ethereum smart contract growth.
Superior ecosystem
Ethereum offers numerous benefits to developers and consumers, including decentralization and anonymity. The most important benefit of the Ethereum blockchain is its support for smart contracts. With the smart contract functionality on the blockchain, it is easy to create a large number of projects or tokens.
Ethereum also has a significant advantage over other blockchains as it provides many users with a safe haven to liquidate their assets. Many people prefer Ethereum as a blockchain project because of the large and innovative developer community on the Ethereum network.
In terms of smart-contract-enabled applications, the Ethereum blockchain offers a diverse ecosystem. The large number of applications on Ethereum, such as Dex and lending platforms, creates a significant advantage for user experience and ecosystem diversity. On the Ethereum blockchain, investors can easily borrow and lend money through lending services like Aave or trade on decentralized exchanges like Uniswap.
Ethereum’s drawbacks include high transaction fees and scalability issues.
Although the Ethereum blockchain is a pioneer in many areas, it has some drawbacks. The most important of these disadvantages is that transaction fees on the network are sometimes quite expensive. However, this is determined by the balance between supply and demand due to the decentralized nature of the Ethereum blockchain.
Scalability is another problem with the Ethereum blockchain. Currently, the Ethereum blockchain has a lower transaction capacity compared to other blockchains. Considering the number and speed of its users, Ethereum might take a back seat. However, other efforts sacrifice at least one of the elements of security, decentralization, and scalability, the so-called scaling paradox.
Ethereum aims to achieve these three concepts simultaneously. In the Ethereum 2.0 roadmap, several measures are planned to increase the scalability of the blockchain, and it is expected to run faster, cheaper, and with a large transaction capacity.
Is Ethereum Protected?
With a distributed ledger system and a large number of independent validators, Ethereum is extremely secure. With the slahing process designed for malicious validators, Ethereum also increases the security of the blockchain.
