Ethereum is a universal smart contract platform that enables the launch of decentralized applications, and its main value lies not in its native currency Ether (ETH), but in the possibilities provided by the Ethereum Virtual Machine (EVM).
Various blockchain projects are created on the Ethereum platform, such as decentralized finance (DeFi) applications, crypto lending platforms, farming, and many others.
History of Ethereum creation
Back in 2013, Canadian programmer and co-founder of Bitcoin Magazine, Vitalik Buterin, along with Dr. Gavin Wood, who later created another popular project called Polkadot, presented the concept of the Ethereum blockchain platform, in which cryptocurrency played a role not only as a means of payment, but also allowed for the exchange of resources for a multitude of independent web services operating in a single peer-to-peer network.
And in the summer of 2015, the Ethereum network was launched in test mode, and 9 months later, the "Homestead" protocol was published, and the network began operating in full format.
Why Ethereum is Growing in Price
One reason for Ethereum's growing price is its smart contract functionality. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. This allows for the automation of transactions and removes the need for intermediaries, reducing costs and increasing efficiency. Ethereum's ability to support smart contracts has made it a popular choice for developers and businesses looking to build decentralized applications (dApps).
Another reason for Ethereum's price growth is the increasing interest in cryptocurrencies and blockchain technology. As more people become aware of the potential of blockchain technology, demand for Ethereum and other cryptocurrencies is likely to increase. Additionally, Ethereum has a limited supply of tokens, with a current circulating supply of around 117 million ETH. This scarcity has also contributed to its increasing price.
Advantages and Disadvantages of the Ethereum Network
One advantage of the Ethereum network is its flexibility. Developers can build a wide range of dApps and smart contracts on the Ethereum platform, making it a versatile platform for innovation. Additionally, Ethereum has a large and active developer community, which contributes to the growth and development of the platform.
Another advantage of Ethereum is its openness. Anyone can build on the Ethereum platform, and there are no restrictions on who can participate. This has led to a high level of innovation and experimentation on the platform.
However, one disadvantage of Ethereum is its scalability issues. As more dApps and smart contracts are built on the Ethereum network, it becomes more congested, leading to slower transaction times and higher fees. This has led to the development of alternative blockchain platforms that aim to solve these scalability issues.
Another disadvantage of Ethereum is its energy consumption. The process of verifying transactions on the Ethereum network requires a significant amount of computational power, which in turn requires a significant amount of energy. This has led to criticism of Ethereum and other blockchain platforms for their environmental impact.
The Popularity of ERC 20 Tokens
ERC 20 tokens are tokens that are built on the Ethereum platform and follow a set of standards that allow them to be easily traded and integrated with other dApps. Many initial coin offerings (ICOs) have been launched using ERC 20 tokens, making them a popular choice for fundraising in the cryptocurrency space. In addition to ICOs, ERC 20 tokens are also used for a wide range of other applications, including gaming, social media, and governance.
Prospects for the Ethereum Network
Increasing interest in blockchain technology and the growing number of dApps being built on the Ethereum platform suggests that Ethereum will continue to be a major player in the cryptocurrency space. Another factor that could drive future growth for Ethereum is the increasing interest in decentralized finance (DeFi). DeFi applications are built on blockchain platforms and aim to create a more open and accessible financial system.
The transition to a PoS algorithm has already brought several significant innovations:
- Compared to the PoW algorithm, block rewards have decreased by almost 90%, which significantly reduces inflation in the network.
- The energy consumption of the Ethereum network has decreased by 99.95%.
These two factors open the doors to a larger number of organizations to adopt ETH as an investment asset or to use the Ethereum network itself. Previously known organizations such as Mozilla, Discord, and Tesla were forced to suspend their blockchain implementation plans due to environmental concerns.
Now, after a successful consensus algorithm transition, Ethereum developers will focus on solving scalability issues as it is crucial for Ethereum's global adoption. The next update - Shanghai - promises many protocol improvements, including allowing ETH to be withdrawn for stakers from the deposit contract.