KuCoin Academy 3| Known As “Blockchain 2.0”: What Is Ethereum?
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This is the 3rd lesson we prepared for you! Today’s topic is “Blockchain 2.0” — Ethereum!
Contents:
*What is Ethereum?
*The Father of Ethereum
*Differences between Ethereum and Bitcoin
*Ethereum’s Killer Feature
*Ethereum 2.0
*Conclusion
1. What is Ethereum?
Ethereum is a decentralized computing platform similar to a computer operating system where anyone can build decentralized applications.
Like Bitcoin and other cryptocurrencies, Ethereum also allows electronic cash payments, digital asset transfers, and more. However, its capabilities are much more extensive. You can deploy your own code and interact with applications created by other users. Ethereum also allows for the creation of various complex applications.
Ethereum enables developers to create and run code over a decentralized network instead of through a central server. This means that these applications cannot theoretically be shut down or censored.
2. The Father of Ethereum
With Bitcoin’s development, technology aficionados gradually discovered the drawbacks inherent in Bitcoin: Bitcoin only has a single attribute, which is operating as electronic cash, and its application scenarios are limited.
Bitcoin enthusiasts want to add more functionality and create Bitcoin 2.0, but a teenager believed that everyone trying to patch Bitcoin was not fundamentally solving the cryptocurrency’s defects. The functionality of Bitcoin was still too narrow, and only by creating a brand-new blockchain could this problem be completely solved.
At the end of 2013, Vitalik Buterin, who was only 19 at the time, published the Ethereum white paper, hoping to create a variety of applications across categories such as social, trading, and gaming, on the Ethereum network based on a common programming language. Meanwhile, Vitalik also designed a new cryptocurrency for Ethereum — ETH .
In July 2014, Vitalik conducted crowdfunding for Ethereum. 31,000 Bitcoin were raised in 42 days, worth $18 million at the time. In June 2015, the Ethereum network was officially launched.
3. Differences between Ethereum and Bitcoin
Bitcoin is recognized as the first blockchain. Bitcoin’s purpose is to solve the electronic cash payment problem. It is limited from realizing more complex applications on the Bitcoin Network, but this also bolsters its security.
Ethereum is recognized as a second generation blockchain with even more functionality. Besides electronic cash payments and financial transactions, it provides a greater degree of programmability.
In some aspects, Ethereum has the same functionality as Bitcoin, but in others, they are completely different. For example, Ethereum provides more freedom to developers, allowing them to use their own code to create even more decentralized applications (DApps).
4. Ethereum’s Killer Feature
If Ethereum is just a distributed computing platform where programs can be run, it is not enough to earn it the title of “Blockchain 2.0”. The killer feature of Ethereum is that it has the function of smart contracts. This is what really puts the nail in the coffin.
What is a smart contract? To put it simply, smart contracts are contracts that can be automatically executed.
Via smart contracts, Ethereum can offer so much convenience to project parties looking to issue tokens for financing, such as when conducting an ICO (initial coin offering). In 2017, ETH’s price skyrocketed due to the massive adoption of ICO, which saw it go from $8 at the beginning of 2017 to exceeding $1,400, an increase of 17,400%.
Subsequently, various countries have implemented regulatory policies for ICOs. That led to the number and scale of global ICOs to drop sharply, and its popularity came to an end.
5. Ethereum 2.0
Although Ethereum has great potential, it also has many shortcomings and limitations. The current Ethereum network has limited processing capacity, only being able to process about 30 transactions per second. Due to its decentralized nature, this problem is difficult to resolve.
Next, Ethereum and other Proof of Work (PoW) cryptocurrencies are resource intensive. In other words, to maintain normal operations on the Ethereum network, mining must be performed, requiring a lot of energy.
To solve these aforementioned shortcomings and limitations, Ethereum proposed a series of upgrade plans, collectively referred to as Ethereum 2.0 (ETH 2.0). Once fully implemented, it will effectively improve Ethereum network performance.
6. Conclusion
Ethereum is a breakthrough in the development of blockchain technology, and it represents the dawning of the blockchain 2.0 era. If the era of blockchain 1.0 is represented by Bitcoin, then blockchain 2.0 is about providing new ideas and methods for value transfer.
The era of blockchain 2.0, as represented by Ethereum, is making commercial applications on the blockchain possible. Although Ethereum has many functionality limitations, we must admit that Ethereum is one of best public chains. Ethereum 2.0 has entered development and is currently in its testing stages. All we know for now is that it has a brilliant prospect.
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