Ethereum
Continuing our Coins series, this week’s pick is non other than Ethereum and its Ether.
Last week we covered Bitcoin, so naturally, now it is time to talk about the second biggest cryptocurrency: Ether.
What is Ethereum, what is Ether?
Let’s get those terms straight. Ethereum is decentralized, open-source, blockchain platform — similar to the Bitcoin’s blockchain but with more options and functionality.
This blockchain uses its own cryptocurrency and that is called Ether (ETH). Ether is currently second in market value only to Bitcoin and, same as BTC, it is now widely accepted on different networks.
The project was launched in July 2015 by a small group of people among which was also today’s Ethereum CEO and public face Vitalik Buterin. The promise of Ethereum was (and still is) to enable developers to build and publish smart contracts and decentralized applications (dApps) that can be used without the risks of downtime, fraud, or interference from a third party. Word for word, Ethereum claims it can be used to “codify, decentralize, secure, and trade just about anything.”
What can I use it for?
Ether provides the same basic function as most of other cryptocurrencies — you can use ETH to make secure, incorruptible transactions which will be eternalized on the Ethereum blockchain.
However, Ethereum’s goals are wider and more ambitious. By opting for smart contracts and decentralized applications to be essential part of the Ethereum ecosystem, it now provides an enormous amount of different services, all running on Ethereum (and accepting Ether). To provide some examples: you can use Ethereum to search for jobs, buy computing power, pay worldwide without a third-party, collect tokens, play blockchain games, use decentralized finance services and much more. The possibilities are virtually limitless, you can even code your very own smart contracts.
A phenomenon which experienced quite a boom this year, called NFTs (non-fungible-tokens), is another example of creative use of blockchain technology. NFTs are unique assets which are verified by the blockchain and usually include some kind of artwork — whether it is a picture, GIF, music or video. We will probably do separate article about NFTs in the future, but the reason I am mentioning them here is because most of the NFTs are traded on and verified by, you guessed it, the Ethereum blockchain.
Controversy and future
Plenty of different use cases quickly made Ether one of the most popular cryptocurrencies. However, with more users came new problems — the Ethereum system started to slow down and transactions took longer, which in turn led to increasingly higher gas fees (transaction fees). This problem is prevalent to this day as it still hasn’t been solved. There was an attempt: so-called London upgrade, EIP-1559, was aiming to lower the gas fees by changing the way they were estimated. The upgrade went live on August 5 2021 but unfortunately, it didn’t work at all and Ethereum faced a hard backlash from its community.
But there is a solution to every problem and Ethereum 2.0 might be just what we need. So, what is it?
“Eth2 refers to a set of interconnected upgrades that will make Ethereum more scalable, more secure, and more sustainable. These upgrades are being built by multiple teams from across the Ethereum ecosystem.”
Ethereum 2.0 is a long-awaited, planned, overall upgrade of the whole Ethereum ecosystem and should, theoretically, solve even the problem of extremely high gas fees. Sadly, there is only a rough estimate of the release date of Phase 1 — sometime in 2022 — so we will probably have to wait a little bit longer.
Personal experience
Personally, I have never really been into Ethereum that much, at the time I became interested in it, the gas fees were already unreasonably high and there were better alternatives — e.g. Binance Smart Chain or DeFi services run differently. Though I am very much excited for and curious about Ethereum 2.0!
