More about Ethereum

Ethereum is a blockchain that is constantly growing, evolving and updating. Like Bitcoin, it stores details of specific transactions in blocks on the chain – which means it can run applications with arbitrary algorithmic conditions expressed in code.

Early investors are already amply rewarded for their participation: Ethereum has risen more than 219% in 2021 and is currently trading at around $2,390 (determined by real-time prices from cryptocurrency exchanges). 

How does Ethereum work?

Ethereum's appeal to investors lies in its anticipated ability to scale. It aims to handle multiple transactions simultaneously without sacrificing security or speed. It has been suggested that the computing power required to run the Ethereum blockchain could soon outstrip that of Bitcoin, at least if these proposed upgrades go through.

The Ethereum Foundation

The Ethereum Foundation is a non-profit organisation dedicated to supporting Ethereum. It is part of a much larger ecosystem that is responsible for the development and funding of Ethereum technologies, among other things. The blockchain was originally launched by the Ethereum Foundation in July 2015 under the codename “Frontier”. In these six years, there have been numerous network updates including:

• Constantinople: February 2019
• Istanbul: December 2019
• Muir Glacier: January 2020
• Berlin: April 2021
• The London hard fork: August 2021

Overall, the goal of Ethereum is to become a worldwide platform for decentralized applications. It aims to allow users from across the globe to both write and run software that resists downtime, censorship and fraud.

Gavin Wood

The British programmer is the second most well-known and important of the co-founders. Wood coded the first technical implementation of ETH in the C++ programming language. He also proposed the crypto's native programming language Solidity. In addition, he was the first CTO of the Ethereum Foundation. Before this, he worked as a research scientist at Microsoft and went on to establish the Web3 Foundation.

Other co-founders of Ethereum include:

• Anthony Di Lorio
• Charles Hoskinson
• Mihai Alisie
• Joseph Lubin
• Amir Chetrit

As well as this, the Ethereum blockchain can also host other cryptocurrencies called tokens. It does so via the use of its ERC-20 compatibility standard and this has been the most common use of the platform to date. These include  USDT and BNB. Since the rise of Play2Earn games, the interest in the ETH to PHP price has increased significantly.

The solution to this problem was a hard fork without any soft forks. To do this, the consensus algorithm must be changed and the blockchain will split into two parts: Ethereum (ETH) and Ethereum Classic (ETC). The split was designed to reduce the network's mining difficulty (transaction processing times).

Furthermore, the transition process to ETH 2.0 has already been initiated. It includes implementing upgrades such as the London Hard Fork that went live in August 2021. This included five EIPs (Ethereum Improvement Proposals): EIP-3529, EIP-3198, EIP-3541, EIP-1559 and EIP3554. The most well-received was the EIP-1559.

Further, EIP-1559 introduced the fee-burning mechanism, where a part of each transaction fee (the base fee) will be burned and taken out of circulation. This should lower the circulating supply of Ether and thus increase the coin's value.

In less than two months after the London Hard Fork upgrade, over $1 billion of Ether had been burned.

Following this, smart contracts need to be converted from the high-level languages (that are understood by humans) into the low-level languages (that are understood by computers/machines). The reason behind this is because a computer environment – the Ethereum Virtual Machine (EVM) is where smart contracts are both deployed and executed. As such an EVM is incorporated in each Ethereum node. It can execute more than 140 operation codes. These opcodes are machine instructions that can be put together to perform almost any task required of them. They are referred to by the term “Turing-complete”.

It is the invention of smart contracts that have been instrumental in the development of DAOs (Decentralized Autonomous Organizations) and the entire decentralized finance ecosystem, most commonly referred to as DeFi. This allows the more traditional financial services, including loans, lending and insurance to be accessed via peer-to-peer powered DApps.

Ethereum token standards

These token standards are the blueprints used for developing tokens that can be used with the wider Ethereum ecosystem network. This can include those tokens that can be exchanged and traded for one another (known as fungible tokens) as well as those unique tokens (non-fungible tokens).

Ethereum token standards were originally introduced by Ether's developers to assist users with the creation of new digital currencies, making it cheaper and quicker than starting from nothing.

Although there are many different ERC token standards that are deployed on the Ethereum network, there are three more popular ones, which are:

Phase 0: This was launched in December 2020 and introduced the Proof of Stake concept. It is also responsible for the creation of new blocks, staking rewards, transaction verification and the management of new Ethereum blockchains labelled “shard chains”.

The next major phase of the development will bridge the Beacon Chain to the new Ethereum network to replace the current PoW consensus mechanism with the PoS system. The network stakeholders (validators) will start to produce blocks, verify transactions and manage the security of the blockchain instead of miners when Ethereum and Ethereum 2.0 have been merged.

When the merge has been completed, there will be a number of smaller upgrades required. Developers will start to enable sharding, which will create numerous mini-blockchains. Every shard will be required to verify its own transactions as opposed to the whole network verifying every single transaction. The Beacon chain will be the main coordinator between shards and will randomly assign validators to each one.

As soon as Proof of Stake and sharding have been enabled, developers will make further tweaks in order to increase network security even more. This includes adding anonymity features to hide the identities of validators behind the block proposals. It also includes the use of new technologies, such as  the Verifiable Delay Function to make the randomness of validator assignments even more secure and make it harder for malicious entities to interrupt and disrupt the Ethereum network.