What Makes ETHEREUM Special.
Chances are you think Ethereum was the second ever crypto currency.
No shit, that’s what I thought too.
I was shocked when I found out it went live 6 years after Bitcoin. Bitcoin launched in 2009 and Ethereum in 2015.
In the space of 6 years many things happened, several coins improved on Bitcoin — made crypto faster, cheaper.
But none of them became dominant.
Ethereum however stood out.
Ethereum didn’t just improve on Bitcoin’s formula, it attempted something new — dInternet.
What is Ethereum?
Bitcoin is a digital currency. Nothing more.
Ethereum on the other hand is a software platform.
The currency you’re thinking of is Ether — ETH.
(If you already knew, play along).
Ether is the incentive for running the Ethereum network.
Ether finances the Ethereum network, but on it’s own it’s just Bitcoin 2.0.
Back to Ethereum, like I said it’s a software platform.
A software platform is digital environment used to develop and run applications.
An example is Android
Android is an OS but it’s also a software platform.
What makes Ethereum different from Android is that it’s a decentralized software platform.
That means instead of running on Google’s servers, it runs on Blockchain technology.
So, to conclude on DeFining Ethereum — it’s a decentralized software platform.
On Ethereum we have dApps instead of apps.
(The d stands for decentralized, decentralized apps, decentralized internet).
Why We Need dApps & dInternet
Till today, the results of the 2021 US presidential election is contested.
Trump is still in court, some Republicans won’t shut up about how they were cheated out of the win.
Every 4 years it’s the same shit.
Someone wins and there’s outrage.
The problem is their complaints are valid. Unlikely but valid.
The election process is extremely centralized, no one on the outside knows what’s going on.
There’s rumors (and pictures) of ballot boxes thrown in the trash. Plus rigging is a possibility (with the right connections).
What if there’s a way for people to vote anonymously, every vote is made public immediately it’s cast, and because it’s Blockchain technology, it’s impossible to edit.
You’d think replacing the US electoral body would be a task for Einstein.
It’s simple enough that it’s the default Smartcontract on Solidity.
Before we treat smartcontracts, here’s a less American example.
You probably have some form of cloud storage. Dropbox, Apple, Google etc.
You back up everything — Pictures, photographs, your favorite pornos. (I’m not judging).
You have it all on the ‘cloud’.
What you don’t know is in exchange for cheap storage, Apple now knows you like 10 person gangbangs, and that you’ve been secretly collecting feet pics .
(That’s why you get a lot of booty recommendations on YouTube).
Keeping things a little more PG.
If cloud storage was decentralized your photos (and videos)would be divided, and multiple copies of each part sent to different nodes on the Ethereum network.
(Nodes are computers running Ethereum).
They can’t view your files since they have just one part of a puzzle.
I don’t know about you but I’d be more comfortable uploading my stuff.
That is why we need decentralization.
How Ethereum Works
In a word — Smartcontracts.
Ethereum would be an even more sucky Can without smartcontracts.
Smartcontracts are what made Ethereum special.
They are self executing blocks of code.
That means they run themselves when certain conditions are met.
when randomperson sends random amount of Ether, send equivalent amount of USDT.
We just created a basic ETH/ USDT exchange using a smartcontract.
From simple apps like exchanges to more complex apps like games, all dapps use smartcontracts.
They’re the technological revolution that separates Ethereum from the rest.
How Ethereum Uses Smartcontracts
It’s easy to imagine a smart contract exchange but a game is pretty damn complex.
Can a smart contract be a game?
Yes, because all dApps on Ethereum use smartcontracts.
No because the actual apps aren’t built on Ethereum.
Take the exchange above for example. It’s crude to say the least. Ideally we’d want a site like Binance
People can login and do a lot more than sending and receiving crypto.
To walk around this we create our own Binance.
Stick with me here.
We create a frontend that performs similar functions to Binance’s site.
But instead of having our backend be classic servers we host it on the ETHEREUM network.
That’s how complex dApps work.
The front end is designed on any platform, but the backend is a smartcontract.
Crypto kitties for example.
The front end is the actual game.
The creation, ownership and trading of the kitties is managed on Ethereum (the back end).
With these type of modifications, dApps can replace any app no matter how complex.
Bonus — Why Ethereum Transactions are Faster than Bitcoin.
First, block times can be any amount of time.
Solana currently does 400 ms per block.
Bitcoin does 10 minutes.
Ethereum 14 seconds.
Block times can be anything.
The problems with short block times are:
- A lot of uncle blocks.
An Uncle Block happens when two blocks are mined at the same time.
When this happens, one block is invalidated, it becomes an uncle block.
With short transaction times there’s a shit ton of uncle blocks.
In an already energy intensive ecosystem this just turns things up to 11.
Bitcoin’s solution is to make sure there’s enough time for the block to propagate across the network.
Ethereum pays miners a small fee for mining Uncle blocks and an extra fee to miners that include uncle blocks in their blockchain.
This reduces waste and quickly makes a longer chain.
- The second problem with short block times is lower security.
Blocks are secure because of the hashing power required to complete transactions, if block times are too short, there’s a risk of reversal.
But the good thing is reversal difficulty is exponential not linear.
For example, imagine
It costs 1 W of energy to alter 1 block of Ethereum but 10,000 W for 1 block of Bitcoin.
It costs 10 W of energy for 2 blocks of ETH but 100,000 for 2 of BTC
After just 6 blocks it’ll cost 1 Million Watts to reverse the ETH transaction.
6 ETH blocks will happen in 84 seconds (1 minute, 24), the first Bitcoin Block hasn’t even been mined yet.
Another factor is that the mining algorithm of ETH is just better.
6 years passed and Bitcoin wasn’t really improved.
That’s all on ETHEREUM.