#Crypto 360
Ethereum is a decentralised blockchain that offers its infrastructure for other projects to build their dApps on.
Key Takeaways
• Ethereum is a decentralised blockchain that offers its infrastructure for other projects to build their dApps on.
• The man behind Ethereum is Vitalik Buterin who put forward the idea in a whitepaper in 2014. The project went live in 2015.
• The eponymous cryptocurrency Ethereum is the world’s second largest in terms of market cap today.
Which is the best cryptocurrency? “Bitcoin (BTC)”—prompt comes the answer. But ask a Web3 technocrat what they consider to be the best cryptocurrency and there is only one answer— “Ether.” Why so?
That’s because though Bitcoin (BTC) is the most popular and most valuable cryptocurrency, it is Ethereum (ETH) that has gained currency within the developers’ community due to that scalability the Ethereum blockchain provides. While Bitcoin has become almost synonymous with crypto, Ethereum is the crypto nerd’s crypto.
So, what is about Ethereum that it emerged as the world’s second largest cryptocurrency and continues to be a paradigm for other projects? Let’s find out.
To put it simply, Ethereum (ETH) is a decentralised blockchain network that offers its smart contracts infrastructure to other blockchain projects to build their decentralised applications (dApps). The limitations in Web 2.0 compelled developers to make the move towards the blockchain networks of Web 3.0. They were quick to onboard Ethereum due to the scalability and affordability it offers. Any new project can join the Ethereum network and build truly decentralised applications (dApps) via smart contracts.
Note: A smart contract is the set of rules governing how a network should run and how the funds supporting the network should be handled.
Ethereum has an Ethereum Virtual Machine (EVM) which is a virtual platform run by a worldwide network of nodes. These nodes provide processing power to project developers so that they can build dApps. While building dApps on the Ethereum platform, developers pay all transaction-related costs in the form of gas fees using ETH, the network’s native cryptocurrency. Ethereum can be applied to codify, decentralise, secure and trade almost every product or service.
Ethereum can be used to support:
• Crowdfunding platforms
• Trading exchanges
• Corporate governance models
• Intellectual property
• Smart property
• Contracts and agreements
• Voting
Besides, nobody is powerful enough to issue arbitrary rules and regulations that might restrict your odyssey to limitless skies; hence, decentralisation. In 2015, Microsoft partnered with ConsenSys to offer a cloud-based Ethereum blockchain development environment to enterprises and developers.
In 2020, Advanced Micro Devices (AMD) partnered with ConsenSys to build a network of data centres using the Ethereum infrastructure. If we transport the world of crypto to that of cartoons, Ethereum is Bob the Builder (😎)
Ethereum’s story began with a little preface that begins around the birth of Bitcoin in 2009. Like several enthusiasts, a young tech wizard also took to the Bitcoin and its underlying network. He even wrote about the emerging fintech trend for a digital magazine in exchange for BTC. But he soon noticed a limitation.
The young nerd opined that a blockchain network should build a support system for a variety of projects, not just a cryptocurrency. The Bitcoin network, though a pioneer, was too complacent in functioning as a mere powerhouse of the cryptocurrency. While Bitcoin continued with its model, this technocrat built another blockchain network along with his friends and named it Ethereum. In 2021, he was crowned the world’s youngest crypto billionaire when he was just 27.
We are indeed talking about Vitalik Buterin whose vision of the future is as unconventional as his fashion sense but turns out everyone is embracing it. In 2014, Buterin published his iconic white paper on the Ethereum technology. He envisioned a blockchain network as one resembling a decentralised application (dApp) template. Any project that onboards this network can customise this dApp template as per the specific requirements. This is how the network of the networks was born.
The Ethereum network, employing the proof-of-work (PoW) consensus mechanism, went live the next year in 2015. The Ethereum core team consisted of Buterin, Mihai Alisie, Charles Hoskinson, Joe Lubin, and Gavin Wood. The team established the Ethereum Foundation, a Switzerland-based non-profit, to administer the platform.
The native coin supporting the Ethereum network is called Ether (ETH) which users are required to pay as gas fees for successfully executing transactions. Today, ETH is the second largest cryptocurrency by market capitalisation after Bitcoin (i.e. $359 billion at the time of writing).
The price of ETH has nearly doubled since the bull run in the crypto market began in October 2023 in anticipation of Bitcoin ETFs. At press time, ETH was trading around $3k.
Source: ETH/USDT, BitDelta/TradingView
To say that Ethereum had a completely smooth journey so far would be far from reality., but the way the network overcame these challenges is a lesson in resilience. In fact, the project has witnessed several hiccups since it went live.
In 2016, a group of participants gained majority control of the network and sold tokens worth more than $50 million. What step should the team take? Should it accept the action as an immutable part which is inherent to a blockchain network or let a central leadership take charge to split the network?
Only a year after its launch, the network was facing the challenge of choosing between principles and practicality. Buterin’s team chose the latter which led to the Genesis Split, which subsequently led to the creation of a new network with a revised history, Ethereum (ETH). The more idealistic ones, too tied to the concept of immutability in blockchain networks, stuck to the original network, Ethereum Classic (ETC).
While Buterin’s decision was criticised for violating the principle of immutability and decentralisation, it also led to the appearance of sanity to a sector that is widely considered to be anarchic. The network has undergone several upgrades over the years in its goal to cement its position as the leading blockchain network for dApps.
In 2022, the network switched from proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS) mechanism in 2022. Known as the Merge, the upgrade helped Ethereum transition from an energy-intensive platform to a more scalable and efficient network. The Merge cut its energy usage by 99%, making it sustainable for the future. The next big goal of the Ethereum network is to achieve 100,000 transactions per second (TPS) on rollups.
As Buterin puts it, the Ethereum network has a roadmap for the future: The Merge implements upgrades relating to the switch from PoW to PoS. The Surge implements upgrades related to scalability by rollups and data sharding. The Scourge implements upgrades related to censorship resistance, decentralisation and protocol risks from maximal extractable value (MEV).
The Verge implements upgrades related to verifying blocks more easily. The Purge implements upgrades related to reducing the computational costs of running nodes and simplifying the protocol. The Splurge implements other upgrades that lie outside the purview of the previous categories.
Learn more about the Ethereum Upgrade Roadmap.
Now that the Ethereum network has implemented the Merge, it is implementing the Splurge. In March 2024, Ethereum implemented the Dencun upgrade which executed improvements on both the execution layer (Cancun) and the consensus layer (Deneb). The upgrade is a part of the Surge phase.
So, what is Ethereum seeking to achieve through these upgrades? Inexpensive transactions, extra security, improved user experience and a future-ready model are among the features Ethereum wants to add to its network.
Interestingly, Ethereum upgrades don’t take place in sequence. Instead, these upgrades take place simultaneously. The Ethereum team has claimed that it will introduce several crucial upgrades over the next few years to make Ethereum the blockchain of the future.
As a blockchain network, Ethereum is far more useful than Bitcoin because the former has built a large decentralised ecosystem where a huge number of projects build their dApps. As a result, Ethereum is called “the world’s programmable blockchain.” Bitcoin, on the other hand, has only chosen to be a distributed ledger for its eponymous native cryptocurrency.
Both Bitcoin and Ethereum deployed the PoW consensus mechanism when they began operating. While Bitcoin still uses the much-criticised energy-intensive PoW mechanism, Ethereum transitioned to PoS during the Merge fork in 2022. As far as the native coins of these two blockchains are concerned, BTC has an upper hand over ETH—both in terms of the value of one unit and of market capitalisation. In fact, BTC is the largest cryptocurrency in terms of market cap, followed by ETH.
In terms of circulation, 21 million is the maximum number of BTC coins that can exist. When it comes to ETH, it’s unlimited. Currently, 120 million ETH coins are in circulation.
BitDelta traders can buy ETH on your app with a debit/credit card or in exchange for another cryptocurrency. Traders are recommended to closely observe the latest updates taking place on the Ethereum network as they influence ETH’s price movement a lot.
A smart trader capitalises on the latest trends in the crypto market and gains substantial returns by making a wise investment in ETH. In simple words, buy low and sell high.
Register now on BitDelta to begin your trading journey.
A. Ethereum (ETH) is a decentralised blockchain network that offers its smart contracts infrastructure to other blockchain projects to build their dApps.
A group of computer engineers, Vitalik Buterin, Mihai Alisie, Charles Hoskinson, Joe Lubin, and Gavin Wood, created Ethereum. The project went live in 2015.
Ethereum is used by businesses to build dApps over a blockchain network. All transaction fees on the network are paid for using the eponymous native token, Ethereum or ETH.
Ethereum deployed the PoW consensus mechanism when it began operating in 2015. However, it switched to the PoS mechanism during the Merge in 2022 due to environmental concerns.
The native cryptocurrency of a blockchain network is called a coin. Since ETH is the native cryptocurrency of the Ethereum network, it is a coin.
Rain Lohmus, an Ethereum pre-sale investor, owns the most ETH. He holds 250,000 ETH worth $660 million in an inaccessible wallet because he has lost access to the private keys. Buterin comes second, holding 245,000 ETH worth $650 million.
Yes, ETH is the second largest cryptocurrency. The popularity of its infrastructure among dApp developers makes it among the most reliable blockchain projects, making ETH a trusted investment. However, note that ETH is a cryptocurrency and comes with risks, such as price volatility, which are common to all cryptocurrencies.
A. In terms of use cases, Ethereum has proven to be far superior to Bitcoin because the former has provided opportunities to a huge number of projects to build their dApps. Bitcoin only remains a ledger for the eponymous cryptocurrency. If we look at the native cryptocurrencies of these two blockchains, BTC is far ahead of ETH—both in terms of the value of one unit and market capitalisation. BTC is the largest cryptocurrency, followed by ETH.
A. It’s impossible to predict the future. But if we look at past performances and current trends, ETH cannot surpass BTC anytime soon.
Ethereum is dedicated to fostering an ecosystem of decentralised applications. It is also not afraid to adapt to new situations, such as its transition from PoW to PoS during the Merge. This has earned it a lot of trust and goodwill among the blockchain community. Naturally, ETH has become a trusted cryptocurrency and will play a huge role in the future of cryptocurrency.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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