The Benefits of the Ethereum Blockchain
One of the Biggest Cryptocurrencies
Ethereum has well established itself as one of the leading cryptocurrencies out there. Its market cap peaked at almost $140Bn and its value reached an all-time high of $1400 per ETH, solidifying its high ranking position on the crypto list. Currently, around 10% of the entire cryptocurrency market capitalization can be accounted for by Ethereum.
However, one of the first things to understand about Ethereum, is that it’s not just a digital currency. The blockchain-based platform encompasses a range of features including smart contracts, the Ethereum Virtual Machine (EVM) and Ether.
Ethereum’s Purpose
Vitalik Buterin, the face and founder of Ethereum, describes in his white paper the goal of developing an alternative protocol for building decentralized applications, with an emphasis on security, scaling and development time. Decentralized applications are applications that run on a P2P network of computers rather than a single computer prone to failure. His team successfully built the new platform with a general scripting language that enables businesses to build decentralized applications on top of their existing Ethereum blockchain.
“[Blockchain] is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” Sally Davies, FT Technology Reporter. Ethereum enables people to utilize blockchain technology for a range of purposes.
Ethereum Components
Smart Contracts — Transactions
Bitcoin uses blockchain technology to fulfil one function, transferring money from one address to another. Ethereum, on the other hand, uses its blockchain to fulfil a range of different types of transactions known as smart contracts. A smart contract is a computer protocol intended to digitally enforce a negotiated contract, they allow the performance of credible transactions without the need for third parties. People from all corners of the world can interact and exchange value without a centralized authority through a smart contract.
As Smart Contract Investor, Nick Szabo, simply put is, “The general objectives [of smart contracts] are to satisfy common contractual conditions (such as payment terms, liens, confidentiality, and even enforcement), minimize exceptions both malicious and accidental, and minimize the need for trusted intermediaries.”
Ethereum Virtual Machine — A Runtime Environment
The Ethereum Virtual Machine (EVM) is completely isolated from the rest of the Ethereum network and acts as the perfect testing ground for developers to execute code. Developers can create applications and smart contracts and assess them on the EVM to identify errors and bugs that could result in their smart contracts being nullified. The sandboxed environment provides unlimited opportunities for developers to learn, improve and build highly robust smart contracts before applying them to the real Ethereum network.
Ether — The Digital Currency
Ether, which is very often mistakenly referred to as Ethereum, is the digital currency element of the platform. Ether essentially acts as the “fuel” that enables the actions of decentralized apps built on the Ethereum blockchain. Every action performed (i.e. transaction or smart contract) requires some quantity of computational power and time (known as “gas”); miners must be paid for fulfilling the computational workload and Ether is used as payment. The greater the computational workload, the greater the gas fee and the more Ether required to pay it off.
What Are the Benefits of the Ethereum Blockchain?
The Ethereum network holds all the core benefits that ordinary blockchains possess and more…
Core Blockchain Benefits
Immutable = All transactions on the Ethereum blockchain are immutable which means once the data is written it cannot be changed. This makes it nearly impossible to hack, not even the uploader can edit the data once uploaded.
Decentralized = The consensus mechanism used to agree on the validity of a transaction means there is no need for a trusted intermediary to perform the actions. Smart contracts are self-executed.
Fast Transactions = Instead of lengthy manual verification and clearances, automation of blockchain transactions ensure the process is significantly faster. It also tends to be cheaper as there are no third-party fees to be paid.
Secure = All transactions on the blockchain are cryptographically secured and Ethereum has three times more nodes than Bitcoin verifying its transactions.
Malicious hacks associated with Ethereum tend to be the result of poorly coded smart contracts by the platform’s users rather than the incredibly secure Ethereum blockchain itself. In fact, Ethereum announced last year their plans for a transition to proof-of-stake which would make the platform even more secure.
Reliable = Ethereum has proven itself to be a reliable platform and its blockchain has been active for over three years. Applications built on the platform run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.
General Purpose
Other than the basic benefits of the blockchain, Ethereum’s biggest advantage is its adaptability. An incredibly versatile range of applications can be built on the Ethereum blockchain as a result of two core features.
Turing Completeness = This is the idea that Ethereum can compute anything computable given enough resources, it is essentially a “world computer” that can run any code a normal computer could run.
Rich Statefulness = This is how Vitalik describes Ethereum’s ability to remember and maintain more state at the blockchain level. Bitcoin is considered stateless as it can only deal with transactions, Ethereum on the other hand can deal with contract code and data in addition to keeping a balance.
Without getting too technical, these two functions enable any business to produce decentralized applications and implement smart contracts; this is a massive deal and enabled the 2017 ICO boom. An overwhelming majority of the coins out there are ERC20 tokens (coins built on the Ethereum platform). Ethereum has played a key role in bringing some impressive new cryptocurrency projects to the market.
Plutus, A Secure Consumer Payments Platform
Plutus is using the Ethereum network for their native ERC20 token known as PLU, which are rewarded to users of the service.
Plutus is a payments system created by an early blockchain entrepreneur, Danial Daychopan. The platform enables users to utilise their converted crypto for everyday payments via the Plutus app. Customers looking to spend in-store can have the amount of crypto necessary to make a purchase converted into spendable fiat which then goes to the merchant.
This is achieved through the company’s very own decentralized P2P exchange known as the PlutusDEX. Plutus at no point store the funds of a user which makes it incredibly secure in comparison to other payment platforms within the crypto market. Users are immune to any form of company hacks, corruption, downtime etc. that can ordinarily affect people’s assets.
Users who top up their Plutus debit card balance using fiat or converted crypto will receive up to 3% back in the form of PLU (blockchain-based token) which can then be converted and spent on anything using the service. Plutus created the first decentralised loyalty rewards programme, a key feature which was all enabled by the Ethereum platform.
Plutus currently have a live beta version of the platform available now. To unlock the potential of your crypto, buy, or sell at zero fees, visit here: Plutus
Sources
https://blockgeeks.com/guides/what-is-ethereum/
https://www.forbes.com/sites/bernardmarr/2018/02/02/blockchain-a-very-short-history-of-ethereum-everyone-should-read/
https://en.wikipedia.org/wiki/Ethereum
https://www.investopedia.com/tech/what-ether-it-same-ethereum/
https://blog.sfox.com/what-is-ethereum-c3e83e507368
https://hackernoon.com/ethereum-turing-completeness-and-rich-statefulness-explained-e650db7fc1fb
