Ethereum blockchain network (ETC)

Ethereum is a blockchain platform that extends beyond the concept of cryptocurrency, enabling the creation and execution of smart contracts and decentralized applications (dApps). Here’s a detailed overview:

Overview

• Launch Date: July 30, 2015
• Creator: Vitalik Buterin (along with other co-founders such as Gavin Wood, Joseph Lubin, and others)
• Currency: Ether (ETH)

Key Features

1. Smart Contracts: Ethereum’s most significant innovation is its ability to execute smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. Smart contracts automatically enforce and execute the terms, eliminating the need for intermediaries.
2. Decentralized Applications (dApps): Ethereum enables the development of decentralized applications. These applications run on the Ethereum blockchain and are not controlled by any single entity. They can provide a wide range of services, from financial transactions to gaming and social networking.
3. Ethereum Virtual Machine (EVM): The EVM is a decentralized computing environment that executes smart contracts and dApps. It allows developers to build applications that run on the Ethereum blockchain without needing to worry about the underlying infrastructure.
4. Proof of Stake (PoS): Ethereum is transitioning from Proof of Work (PoW) to Proof of Stake (PoS) through Ethereum 2.0 upgrades. PoS is a consensus mechanism where validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to “stake” as collateral. This transition aims to improve scalability and reduce energy consumption.
5. Ether (ETH): Ether is the native cryptocurrency of the Ethereum network. It is used to pay for transaction fees, computational services on the network, and as a means of exchange within dApps.
6. Gas Fees: Transactions and operations on Ethereum require gas, which is a measure of computational work. Gas fees are paid in ETH and compensate miners or validators for processing transactions and executing smart contracts.
7. ERC Standards: Ethereum has various standards for creating and interacting with tokens. The most well-known is ERC-20, which standardizes how tokens are created and transferred on the Ethereum blockchain. ERC-721 is another standard used for non-fungible tokens (NFTs), which represent unique digital assets.
8. Layer 2 Solutions: To address scalability issues, Ethereum supports Layer 2 solutions such as Rollups (e.g., Optimistic Rollups and zk-Rollups) that operate on top of the Ethereum blockchain to process transactions more efficiently.

Major Upgrades

1. Ethereum 2.0 (Eth2): A series of upgrades aimed at improving the network’s scalability, security, and sustainability. Key components include:
   • Beacon Chain: Launched in December 2020, it introduces PoS and coordinates the network’s validators.
   • Shard Chains: Planned for future implementation, these will improve scalability by splitting the network into smaller pieces or “shards” that process transactions and smart contracts in parallel.
   • eWASM: The Ethereum WebAssembly, a new virtual machine that will enhance the execution of smart contracts.
2. The Merge: Completed in September 2022, The Merge transitioned Ethereum from PoW to PoS, significantly reducing its energy consumption and setting the stage for future scalability improvements.

Use Cases

• Decentralized Finance (DeFi): Ethereum is the primary platform for DeFi applications, which offer financial services like lending, borrowing, and trading without traditional financial intermediaries.
• Non-Fungible Tokens (NFTs): Ethereum hosts many NFT projects, which represent ownership of unique digital assets.
• DAOs (Decentralized Autonomous Organizations): Ethereum supports DAOs, which are organizations governed by smart contracts and community voting, rather than centralized management.

Cons

• Scalability: While Ethereum 2.0 aims to address scalability issues, the network has historically faced challenges with transaction throughput and high gas fees during periods of high demand.
• Complexity: The complexity of Ethereum’s smart contract capabilities can lead to vulnerabilities and bugs, which can be exploited by malicious actors.
• Regulation: As with other blockchain technologies, Ethereum faces regulatory scrutiny that can impact its adoption and development.