Ethereum is an open-source, decentralized blockchain system that has its own cryptocurrency.
Ethereum is an open-source, decentralized blockchain system that has its own cryptocurrency. In addition to serving as a platform for many cryptocurrencies, ETH also enables the execution of decentralized smart contracts.
The first description of Ethereum appeared in a whitepaper by Vitalik Buterin in 2013. The project was funded in an online public crowd sale in the summer of 2014 by Buterin and other co-founders. In the Initial Coin Offering (ICO), the project team raised $18.3 million in Bitcoin, and Ethereum sold 60 million Ether for $0.311. Assuming the current price of Ethereum, this would equate to an annualized ROI (return on investment) of over 270%, essentially quadrupling your investment every year since 2014.
It was launched by the Ethereum Foundation on July 30, 2015, under the prototype codenamed "Frontier." A number of updates have been made since then - Constantinople on Feb. 28, 2019, Istanbul on Dec. 8, 2019, Muir Glacier on Jan. 2, 2020, Berlin on April 14, 2021 and most recently, London on Aug. 5, 2021..
In its own words, Ethereum's stated goal is to become a global platform that provides users with decentralized applications that are resistant to censorship, fraud, and downtime.
Ethereum Founders: Who Are They?
A crypto project like Ethereum has an unusually high number of co-founders - eight in all. They met in Zug, Switzerland, on June 7, 2014.
Of the group, Canadian-Russian Vitalik Buterin is perhaps the best known. To this day, he is still working on improving Ethereum since he wrote the first white paper that described the platform in 2013. Before co-founding ETH, Buterin was a writer for Bitcoin Magazine.
Gavin Wood is considered to be the second most influential co-founder of Ethereum, as he created the initial technical implementation of Ethereum in the C++ programming language, proposed Solidity as Ethereum's native language, and was the first chief technology officer of the Ethereum Foundation. Previously, Wood worked at Microsoft as a research scientist. From there, he established the Web3 Foundation.
Additionally, Ethereum was founded by: - Anthony Di Iorio during its early stages of development, who funded the project. Charles Hoskinson was the principal architect of Ethereum's legal framework and its Swiss-based foundation. In addition, Mihai Alisie assisted with the establishment of the Ethereum Foundation. - Joseph Lubin, who, like Di Iorio, found an incubator for ETH startups called ConsenSys based on Ethereum and helped fund it during its early days. - Amir Chetrit, who helped co-found Ethereum but stepped away from it early in its development.
Ethereum: What Makes It Unique?
Ethereum was the first blockchain-based smart contract platform. A smart contract is an agreement between several parties on the internet that can be automatically fulfilled through the use of a computer program. By reducing the need for trusted intermediaries between contractors, they reduce transaction costs and increase transaction reliability.
In addition to its smart contract technology, Ethereum introduced a platform that allowed smart contracts to be executed using the blockchain, further strengthening the benefits of smart contracts. In the words of Ethereum co-founder Gavin Wood, the Ethereum blockchain was designed as a kind of "one computer for the entire planet," theoretically making any application more robust, censorship-resistant, and less prone to fraud by using a network of public nodes globally distributed.
Through the use of its ERC-20 compatibility standard, Ethereum's blockchain can also host other cryptocurrencies, called tokens. ETH has been used primarily for this purpose so far: more than 280,000 ERC-20-compliant tokens have been created. Over 40 of these are among the top 100 cryptocurrencies by market capitalization, such as USDT and LINK.
Ethereum London Hard Fork
In seasons of high demand, Ethereum's network sometimes buckles due to its high transaction fees. May 2021 was the peak month for the average transaction fee on the network, reaching $71.72.
Additionally to high transaction costs, scalability issues plague the leading altcoin.
Several new features will be added to the platform as well as a transition to a proof-of-stake algorithm to increase its scalability. As part of the migration to ETH 2.0, the development team has already implemented some upgrades, including the hard fork in London.
The London upgrade took place in August 2021. It included five Ethereum Improvement Proposals (EIPs), including EIP-3529, EIP-3198, EIP-3541, and the most notable ones, EIP-1559 and EIP-3554.
Among all the EIPs, EIP-1559 is arguably the most popular upgrade.
What Is EIP-1559?
As part of the EIP-1559 upgrade, a new mechanism is introduced for estimating gas fees on the Ethereum blockchain. To get their transactions picked up by a miner before the upgrade, users had to participate in an open auction. As expected, the highest bidder wins in a first-price auction.
A set "base fee" is charged for transactions to be included in a next block with EIP-1559, and this process is handled by an automated bidding system. Depending on the network congestion, this fee varies. A user may pay a miner a "priority fee" for faster inclusion if they wish to speed up their transactions.
In addition, EIP-1559 introduces a fee-burning mechanism. The base fee from each transaction is burned and removed from circulation. It is hoped that this will reduce the circulating supply of Ether and potentially increase the token's value over time.
It is interesting to note that the network burned over $1 billion worth of Ether less than two months after the London upgrade was implemented.
What Is the Current Circulation of Ethereum (ETH) Coins?
Approximately 117.5 million ETH coins were in circulation in September 2021, 72 million of which were issued in the genesis block, the first block on the Ethereum blockchain. Among these 72 million, 60 million were allocated to the original contributors who funded the project in 2014, and 12 million went to the project's development fund.
To the miners on the Ethereum network, the remaining amount has been distributed as block rewards. In 2015, the original reward was 5 ETH per block, which went down to 3 ETH in late 2017 and then to 2 ETH in early 2019. In general, it takes 13-15 seconds to mine an Ethereum block.
Ethereum Improvement Protocol, EIP-1559, was part of the August 2021 Ethereum network upgrade. The EIP-1559 proposes a "base fee" instead of a first-price auction mechanism where the highest bidder wins. To prioritize a transaction, users can pay the miners a "tip" or "priority fee.". This dynamic adjustment reduces the volatility of Ethereum gas fees, although it does not reduce the price, which is notoriously high during peak congestion on the network.
Ethereum's economics differ significantly from Bitcoin's because the former is not deflationary, in other words, the total supply is not capped. According to Ethereum's developers, this is because the network does not have a "fixed security budget". By adjusting ETH's issuance rate via consensus, the network can maintain the minimum issuance needed for adequate security.
With the introduction of EIP-1559 however, the base fees used in transactions are burned, removing the ETH from circulation. This means higher activity on the network would lead to more ETH burned, and the decreasing supply should lead to appreciation of Ethereum price, all things equal. This has the potential to make Ethereum deflationary, something ETH holders are excited about — a potential appreciation in Ethereum price today.
What are the security measures of the Ethereum Network?
As of August 2020, Ethereum is secured via the Ethash proof-of-work algorithm, belonging to the Keccak family of hash functions.
The network will, however, transition to a proof-of-stake algorithm as part of the major Ethereum 2.0 update scheduled for late 2020.
In the beginning of December 2020, staking on the Ethereum 2.0 network became possible after the Beacon Chain (Phase 0) went live. Ethereum stakes are made by depositing ETH (32 ETH is needed to activate the validator software) to a deposit contract on Ethereum 2.0, thereby helping to secure the network by storing data, processing transactions and adding new blocks to the blockchain.
ETH 2.0 will have a reduced staking reward of between 7% and 4.5% annually depending on the distribution curve (participation and average staker proportion): some early stakers received 20%, but that percentage will eventually drop to between 7% and 4.5%.
A stake in Ethereum requires a minimum of 32 ETH. Investing in Ethereum 2.0 means that your stake will be locked up on the network for months, if not years, until the Ethereum 2.0 upgrade is complete.
Where Can You Buy Ethereum (ETH)?
Well that is rather obvious, Klever Wallet and trade on Klever Exchange.
By Warren Manuel
*Curated from different sources.