Ethereum (ETH)


Ethereum is a decentralized open-source blockchain platform that facilitates the creation and deployment of decentralized applications (dApps) and smart contracts. The platform's native cryptocurrency is Ether (ETH), which is used to power transactions and incentivize network participants. Ethereum was created by Vitalik Buterin in 2013, and it went live on July 30, 2015. In this article, we will explore the history of Ethereum, its technology, and its current and future prospects.

History of Ethereum

Ethereum was conceptualized by Vitalik Buterin in late 2013. Buterin was a programmer who had become interested in Bitcoin and blockchain technology. He saw that Bitcoin was primarily a digital currency and that its scripting language was limited in functionality. Buterin believed that blockchain technology could be used for more than just digital currencies and that a new platform was needed to achieve this. He began working on Ethereum, and in January 2014, he presented the idea at a Bitcoin conference in Miami.

Ethereum's initial fundraising was conducted through a presale of Ether tokens in 2014, which raised around $18 million. The presale was conducted to fund the development of the platform and to distribute the tokens to early adopters. The Ethereum network went live on July 30, 2015, and the Ether token was listed on various cryptocurrency exchanges.

Technology of Ethereum

Ethereum uses a proof-of-work (PoW) consensus algorithm, which is similar to Bitcoin. However, Ethereum is moving towards a proof-of-stake (PoS) consensus algorithm, which is more energy-efficient and faster than PoW. The PoS algorithm works by having network participants stake their Ether tokens as collateral to validate transactions and create new blocks.

One of Ethereum's key features is its ability to execute smart contracts. Smart contracts are self-executing contracts that can automatically enforce the terms of the agreement between two or more parties. They are programmed in Solidity, a Turing-complete programming language. Smart contracts can be used for a variety of applications, including decentralized finance (DeFi), supply chain management, and identity verification.

Ethereum's architecture is designed to be flexible and scalable. It allows developers to create dApps that can interact with each other and with the Ethereum network. This interoperability makes it possible for developers to create complex applications that can leverage the benefits of blockchain technology.

Current and Future Prospects

Ethereum has become one of the most popular blockchain platforms, with a market capitalization of over $300 billion. Its popularity is due to its flexibility, scalability, and the ability to create smart contracts. Ethereum is also the most widely used platform for DeFi applications, with over $90 billion in total value locked in DeFi protocols.

However, Ethereum is facing challenges with its current PoW consensus algorithm, which is energy-intensive and slow. To address this, Ethereum is moving towards a PoS consensus algorithm, which is more energy-efficient and faster. This transition is expected to happen in 2021 with the launch of Ethereum 2.0.

Ethereum 2.0 will introduce several changes to the Ethereum network, including the use of the PoS consensus algorithm, sharding, and a new virtual machine. Sharding is a technique that allows the network to process multiple transactions simultaneously, improving its scalability. The new virtual machine will improve the performance and security of smart contracts.

On September 15, 2022, Ethereum blockchain shifted from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism with the introduction of "The Merge" upgrade. However, ahead of the Merge, a hard fork of the Ethereum network, called ETHW, which still uses the PoW consensus mechanism, was created, leading to a triumph for ETH miners. In this article, we discuss the proof-of-work Ethereum fork, the history of PoW Ethereum, and the differences between ETH and ETHW.

ETHW or ETHPoW is a hard fork of Ethereum that maintains the proof-of-work mining process for ETH miners. The chain ID that ETHPoW used is 10001, but it was already in use by a Bitcoin Cash testnet, causing accessibility issues for ETHW users. Despite this, crypto exchanges like Binance and Coinbase showed support for ETHW. For instance, Binance announced its ETHW mining pool, stating that it will be subject to the same review process as other cryptocurrencies.

PoW Ethereum (ETHW) works by miners solving arbitrary mathematical challenges to validate transactions and mine new tokens. In return, they are rewarded with ETHW, the native asset to the ETHPoW chain. Crypto trading platforms and exchanges like Crypto.com, Coinbase, and Binance offer ETHW for trading.

Hardware or software wallets can be used to store ETHW. Hardware wallets offer more security than software wallets as the funds are stored offline using wallets like Ledger Nano S. Crypto owners with software wallets retain custody of their private keys as opposed to allowing them to be held by the exchange.

After the Merge, the Ethereum network was split into two versions: ETH, which uses the PoS consensus algorithm, and ETHW, which uses the older PoW algorithm. ETHW miners receive rewards in the form of Ethereum tokens by solving complicated mathematical puzzles, whereas validators will need to stake ETH for revenue purposes.

In conclusion, ETHW aims to maintain the proof-of-work mining process for ETH miners, offering them a revenue stream. However, it is important to note that the proof-of-work consensus scheme's incentive structure requires the network's miners to perform many hashes to obtain the first usable block, making it an energy-intensive process. As the cryptocurrency industry moves towards more energy-efficient consensus mechanisms like proof-of-stake, it remains to be seen how long PoW Ethereum will remain relevant in the market.

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