Coin Innovation: Ethereum 101

Ethereum has risen to be one of the most reliable cryptos in the world. From its humble beginnings back in 2013, the coin then rose to be one of the best cryptos in the industry. It has played a big role in shaping the development of the digital currency into a stable one.

Vitalik Buterin had an idea back then and wanted to help out the world by creating a faster way of using money. He wanted a way to go beyond the financial use cases that were allowed by Bitcoin. The genius then went on to open up a digital platform in 2013.

He had a paper that was designed to help any decentralised app developers in building a system. That would later become the early start of Ethereum, and it made life easy at some point. It was easy to create smart contracts, and self-enforcing codes allowed developers to put in a range of other apps. Buterin was later awarded in 2014 with $100,000 in a contest for his work.

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It was then launched into the digital money industry back in 2015. It became the first blockchain project that pushed the chance for people to create and enter it into smart contracts. Thanks to its similarity to Bitcoin, it has expanded well and proved to be smooth in handling financial transactions.

How Ethereum Works

Ethereum works even without a third party to confirm and verify transactions. No entity is needed to keep and handle data. It does share a lot of protocol from Bitcoin, including the blockchain design. However, they tweak it a little bit to allow app support beyond cash. 

It was designed to put up a unique flow away from Bitcoin’s original design. These led to the agreements while adding more steps, new ownership rules, digital transaction formats and other ways to transfer state.

Just like any other crypto, Ethereum works like a charm thanks to the miner community. They work hard to connect a device known to the Ethereum network and then ensure the flow of deals in the blockchain.

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With the same design of Bitcoin, Ethereum can also share records of the whole deal history, and that means every node on the network can stash a copy of it. The only thing that would differ is the nodes’ ability to stash the most recent copy of each smart contract.

Ethereum’s fine support on users is also a thing to consider the number of deals that can be done at a time. Up to this point, no one is still able to tell the limits of the said crypto. 

It uses a combo of tech tricks and incentives to shore up its security. They maintain the accuracy of records even without a central authority. The only thing that keeps the crypto from maximising its potential is the act of preserving the balance while keeping the system good to go from the huge number of users.

Recent Ethereum Updates

Ethereum has stepped up its play by going with their 2.0 update back in May. It moved the mining consensus and changed the mechanism into a staking format. You can now see dedicated holders to put their coins while having a chance to get rewards. 

RealT COO and co-head of the Bankless podcast David Hoffman claimed that the 2.0 update pulled down the number of ETH in the market that we all use. That just means you can see the changes in the price appreciation with Ethereum’s supply.

‘One of the reasons why we’re doing Proof of Stake is because we want to greatly reduce the issuance’, said Buterin during the time of the update. ‘So in the specs for ETH 2.0 I think we have put out a calculation that the theoretical maximum issuance would be something like 2 million a year if literally everyone participates’.

The latest testnets also saw the crypto come up with a project of their own set of clients. The software worked well to make the process of using the blockchain a little faster. Also, running a full node proved to be the best way to help the users make sense of the enhanced privacy and security.

The Proof of Stake Model

The ‘Proof of Work’ model was also moved to the ‘Proof of Stake’. That is Ethereum’s new platform in the industry. It is much faster and reliable than the previous version. The developers are keen to launch the 2.0 update and are hoping for a fine result in December.

In the initial test run, they reached around 20,000 validations and that proved to be a great factor for Ethereum’s development. The 2.0 update will most likely be a success, and that just means we can expect more from the crypto in the coming years.

Furthermore, Ethereum’s verifiable randomness function has proved to be a great addition for the main net. It gave the crypto a much better ecosystem in the new format. The fine results from the testnet proved that it was an efficient crypto in the making.

‘I know that we have anywhere between 10 and 20 users announced as already using it from the time it was in testnet only. And I know a number of people have already used it for one or two things on mainnet’, Chainlink’s co-founder Sergey Nazarov said. ‘And I also know that a number of the chains that we're integrating into, interestingly enough, whether they're gaming-focused or not, already have people lined up to use it when we've finalized our integration to that chain’.

Nazarov believes that the addition of the VRF has proven to be a great boost for the crypto as well. It seems that Ethereum can see its future going well with other digital coins coming out and joining the industry as well.

Ethereum is one of the old cryptos in the industry, and it is easy to say that it has held its spot as one of the best digital currencies out there.

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Words: Paul Daniel Flores