What is Ethereum?

Launched in 2015, Ethereum is the community-run technology powering the cryptocurrency, ether (ETH) and lots of decentralised applications. With its open-source, blockchain-based software, Ethereum enables SmartContracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control, or interference. In simple terms, this allows users to conduct transactions (buy and sell and trade goods and services) directly with one another without the involvement of any intermediary.

Ethereum has emerged as one of the most exciting and proven projects in the cryptocurrency space. As the second-largest cryptocurrency by market cap, Ethereum is poised to utilize blockchain technology not only for maintaining a decentralised payment network but also for storing computer code which can be used to power tamper-proof decentralised financial contracts and applications. Ether was intended to complement rather than compete with bitcoin, but it has nonetheless emerged as a competitor on cryptocurrency exchanges. The main difference is block time: an ether transaction is confirmed in seconds compared to minutes for bitcoin.

Ethereum Community:

The Ethereum community includes people from many different backgrounds. Whether you are a developer, an artist, or an accountant, there are countless ways to get involved. Here’s a few resources to get you started:

• Forums
  • r/ethereum - all things Ethereum, including latest news on the network and dApps built on top
  • r/ethfinance - the financial side of Ethereum, including DeFi
  • r/ethdev - focused on Ethereum development
  • r/EtherMining - focused on securing the Ethereum Network (by helping process transactions i.e. mining)
• Twitter
  • The Ethereum community is very active on Twitter: List of influential Ethereum twitter accounts, Ethereum Memes

How is the project governed:

Ethereum works as an open software platform functioning on blockchain technology. This blockchain is hosted on many computers around the world, making it decentralised. Each computer has a copy of the blockchain, and there has to be widespread agreement before any changes can be implemented to the network.

In October 2015, a development governance was proposed as the Ethereum Improvement Proposal (EIP). Normally proposed by the person who had the idea, An EIP is a design document providing information to the Ethereum community, or describing a new feature for Ethereum or its processes or environment. The EIP should provide a concise technical specification of the feature and a rationale for the feature. The EIP author is responsible for building consensus within the community and documenting dissenting opinions.

One of the major challenges of Ethereum was tested when The DAO, a decentralised investment group, saw millions of ETH contributed to its contract. The contract became highly popular within a short time, facilitating millions of transactions. However, the contract’s weakness was swiftly exploited, leading to massive losses for investors through theft of their ETH. 

Although Ethereum prides itself as immutable, the community of developers on the platform agreed that the network should rewrite the ledger and return the stolen capital to those who lost in The DAO. Despite its success of the hard fork, it led to more rift in the direction of the Ethereum network. The action somehow damaged Ethereum’s reputation because its claim of immutability, under whatever circumstance, was never observed. Therefore, many investors have not been easy with the fact that it can only take a group of Ethereum developers to manipulate the low-level running of the network.  

Ethereum Development:

Ethereum is always changing. Right now, we have Eth2 in the works, EIP 1559, and increasing adoption of Layer 2 scaling solutions in prominent Ethereum protocols. These changes aim to increase Ethereum’s scalability, manage network congestion, lower the inaccessibly high gas fees, and improve network efficiency. These changes are happening in the background of the increasing demand for NFTs and DeFi which has led to surging fees and the success of competing chains like Binance Smart Chain.

First, we have to talk about ETH2 which is broken down into 2 main updates: Proof-of-Stake and sharding. ETH is shifting away from PoW where blockchain transactions are verified by miners who solve cryptographic problems that require high computational power and energy. Meanwhile, in PoS, users stake and lock in 32 ETH to become a validator, which creates and validates blocks like miners under PoW. However, they do not have to compete to solve a problem, but are rather chosen at random to create blocks and receive rewards. Rewards are thus received in proportion to the amount of ETH staked. Not only does PoS reduce energy consumption of the network but also support decentralisation by reducing expensive hardware requirements. 

The scalability aspect, meanwhile, is addressed by Eth2’s sharding which is splitting large databases into smaller parts called shards. This increases scalability as validators do not need to store data for the entire network, but just for the shard they are allocated to. 

Building on Ethereum:

Ethereum is top dog for developers. The Ethereum community includes tens of thousands of developers, technologists, users, miners, HODLers, and enthusiasts all over the world. Ethereum has 4x more developers than any other crypto ecosystem. Code commit volume is consistent and there is still plenty of room for expansion. Smart contracts account for 40% of all developers with applications taking the second most. Over the past few years, Defi and infrastructure developers have both increased significantly. “More than 300 new developers per month are joining Ethereum,” Maria Shen, a partner at Electric Capital. “Ethereum has continuously grown through Crypto Winter.”

To conclude

All in all, Ethereum is the dominant blockchain that everyone is talking about. Despite the high gas fees, the future looks bright. I am hopeful that Ether can be the backbone of an open, fair Internet 3.0.

What do you think about ethereum?