Hello everyone, in this article, I tried to cover all the topics about Ethereum.
This is my second coin review. To check the first one, click it.
Eth is the first coin on my Top 10 list.
What is Ethereum?
“Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.
These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property”.
Basically, Ethereum is a platform where everyone can create their own applications.
Instead of dealing with the problems that may occur when building a blockchain, with Ethereum, developers only focussing on improving their applications.
Currently, ETH is the second largest cryptocurrency with $14.795.966.732 USD market cap.
What is a Smart Contract?
A Smart contract is basically a computer code. It enables the exchange of money, property, shares, or anything that has value without third party involvement. (I will write a detailed article about it soon).
History of Ethereum
After the release of Bitcoin in 2008, many developers contributed the open source development of Bitcoin.
People started to write about Bitcoin and try to figure out how it can be improved.
Vitalik Buterin who worked as a writer for a publication called “Bitcoin Magazine”, came up with a brilliant idea.
The ETH whitepaper was developed and described by Vitalik Buterin in late 2013.
He sent it out to a few of his friends, who in turn sent it out further.
The project was publicly announced in January 2014.
The core team consists of Vitalik Buterin, Mihai Alisie, Anthony Di Iorio, Charles Hoskinson, Joe Lubin and, Gavin Wood.
Buterin made a presentation of Ethereum on stage at a Bitcoin conference in Miami.
After a few months, the team decided to hold a crowdsale of Ether, the native token of the network, to fund the Ethereum project.
The sale which began in July 2014 was one of the first Initial Coin Offerings ever made.
Through this sale, more than 31,000 BTC raised which at the time amounted to around $18.3 million.
The price of ether was initially set to a discounted price of 2000 ETH per BTC.
It stayed this way for 14 days before linearly declined to a final rate of 1337 ETH per BTC.
The ICO price of ETH was 0.3 USD on July 22, 2014.
It was 1390 USD on Jan 15, 2018.
In four years, ETH holders gained almost x4635.
Philosophy of Ethereum
As described in the whitepaper, Ethereum is intended to follow the following principles:
The Ethereum protocol should be as simple as possible, even at the cost of some data storage or time inefficiency.
It has to be simple as an average programmer can use it.
Any optimization which adds complexity should not be included unless that optimization is necessary.
Ethereum provides an internal Turing-complete scripting language, which a programmer can use to construct any smart contract or transaction type that can be mathematically defined.
Ethereum protocol has to be modular and separable.
Ethereum protocol is agile. It may be improved by time.
- Non-discrimination and non-censorship:
The protocol should not attempt to actively restrict or prevent specific categories of usage.
What is Ether?
Ether provides “fuel” for the decentralized apps on the Ethereum Network.
In order to develop an application or build a smart contract, developers have to pay Ether.
On the other hand, to use it, users also need to pay Ether.
Fees depend on how much computing power, often called “gas”, an operation requires.
Constantinople Hard Fork
On February 27, 2019, on block 7, 280,000, Constantinapole Hard Fork released.
With this change, ETH will become more scalable and less costly.
- EIP 145: It is an efficiency improvement that lower the gas. This means, now, building a smart contract or dapps is easier than before.
- EIP 1052: It optimizes large scale code execution on the blockchain. Unique hash adoption would make the other contract verification easier as well as efficient.
- EIP 1283: This is for SSTORE operations. It is going to lower the gas cost for data storage.
- EIP 1014: It is an off-chain scaling solution–where transactions aren’t logged on the main blockchain similar to Bitcoin’s Lightning Network.
- EIP 1234: It delays the difficulty bomb for a period of 12 months and reduces mining rewards from 3 ETH to 2 ETH. Difficulty bomb is a term about mining which means that finding block will take more time. This upgrade can be a problem for miners as the reward is less now.
Constantinople ‘s Effect on Price
In my opinion, Constantinople hard fork is the first step for mass adaption.
As it will become easier and less costly to build a smart contract or dapps, it will bring mass adaption.
As a result, we may see some solid price increase in the future.
Istanbul Hard Fork
To solve the scalability problem, the developers suggested that the network migrates from the proof-of-work consensus algorithm to the proof-of-stake consensus mechanism.
Istanbul is the next hard fork for Ethereum. As there is no exact time about the implementation, it will take 8-9 months.
After the Istanbul hard fork, the team will focus on implementing Serenity and ProgPow.
Serenity has been dubbed Ethereum 2.0 while ProgPow stands for Programmatic Proof-of-Work upgrade.
Serenity will be the final upgrade. After it, Ethereum will move from PoW to PoS.
Serenity will introduce Casper and Beacon on the Ethereum blockchain.
ASIC-Resistant Algorithm ProgPoW
According to Coin Telegraph new, ETH developers agreed on implementing the ProgPoW algorithm (ASIC)-resistant Proof of Work (PoW).
ProgPoW will prove to be at diminishing the efficiency advantage of ASICs.
Also, there are rumors in the community that ProgPoW implementation represents the interests of the leading manufacturers of GPUs 一 Nvidia and, AMD.
Serenity will be the phase where ETH will move on PoS.
With the implementation, ETH will be 1000 times scalable, more secure, less costly.
By 2020, in my opinion, we will see Serenity and PoS consensus.
After Serenity, ETH will be no more a minable coin. Rather than mining, we will be staking ETH.
It is not clear but Vitalik Buterin tweeted that, the minimum requirement to stake Ethereum will be 32 ETH.
SEC Decision About ETH
United States Securities and Exchanges Commission (SEC) Chairman Jay Clayton confirmed that Ethereum (ETH) and cryptocurrencies like it aren’t securities under U.S. law, non-profit crypto research organization Coin Center reports on March 12.
This is a huge new for ETH holders like me as I am also concerned with the involvement of SEC.
I think it will affect the price really well in the long run.
(To read my SEC article, Click).
ETH Price Chart
ETH is my biggest holding right now.
With the SEC news and Constantinople Fork, in my opinion, we will see very good price movements soon.
I am not a financial advisor but for me, this is the best time to accumulate ETH.
With the upcoming forks and Proof of Stake algorithm (Serenity), it will be easier to use the platform and it means more adaption which is necessary for the cryptocurrency market.