Everything you need to know about Ethereum (ETH)

What is Ethereum?

Ethereum is the name of the platform developed by Vitalik Buterin.

The virtual currency used within this platform is called Ether (ETH).

In many communities, the expression “Ethereum”, which means both the platform and the currency, is widespread.

Like Bitcoin, Ethereum uses its own Proof of Work (PoW), which is a currency issued by mining.

However, the transition to Proof of Stake (PoS), which adjusts the difficulty of mining according to the minor’s currency holding amount and holding period, is being considered in the future.

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What is Ethereum’s Smart contract?

A smart contract is a function that automatically executes the set requirements by writing a program on the blockchain.

For example, if you record a program on the blockchain that says “One year later, pay 3 ETH in your account to Mr. A”, his 3 ETH will be automatically paid to Mr. A one year later.

Alternatively, if you want to exchange his 30 ETH for his 1 BTC for Mr. A, there is a risk of betrayal that the person who sent the money first will not be sent by the other party.

Here, write “Mr. A sends his 1 BTC” and “I send him 30 ETH” to the smart contract as the conditions for closing the transaction.

Then, since the transaction is completed only when the two conditions are met, it is possible to carry out efficient transactions without a third party.

In this way, smart contracts can dramatically improve business efficiency by deciding the transaction details in advance and automatically executing the transactions.

In particular, smart contracts used in Ethereum have the versatility that can be applied not only to remittance of virtual currencies but also to buying and selling products and real estate transactions, and in various fields, actual business efficiency, and new businesses.

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What is Etehereum’s dApps building platform?

Another feature is the function as a platform that provides a development environment for building decentralized applications (dApps).

dApps are applications that run without a central administrator such as a company, government, or bank.

By managing data in a distributed manner, all participants who use the application can be involved in decision-making such as specification changes.

dApps was an area that was difficult to develop unless you were a programmer with a specific skill, but with the advent of Ethereum, it has become easier.

As a result, many people have been able to enter into his dApps development, and it can be said that the concept of blockchain and distributed management using it has been widely applied to society.

Now it’s easy to bring a wide variety of unique ideas into dApps, and a number of projects have sprung up from Ethereum.

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How is Ethereum’s market capitalization?

As of 2020, Ethereum has a market capitalization of approximately $ 18 billion (approximately ¥ 2 trillion), and is the second-largest cryptocurrency after Bitcoin, which is the undisputed number one in the cryptocurrency market capitalization ranking.

Its size is about 20% of Bitcoin’s market capitalization.

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How was Ethereum created?

In 2013, Ethereum was invented by then 19-year-old Vitalik Buterin.

Buterin, who learned about Bitcoin at the age of 17 in 2011, will increase his interest in cryptocurrencies.

In 2012, he launched “Bitcoin Magazine”, a magazine specializing in the virtual currency industry centered on Bitcoin.

In 2014, Buterin was selected for a teal scholarship offered by PayPal founder and investor Peter Thiel.

The scholarship, in which 20 young entrepreneurs will invest his $ 100,000 over his two years, was also used to develop Buterin’s Ethereum.

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History of Ethereum

Ethereum is being developed mainly by the Ethereum Foundation, which was launched by Mr. Buterin in 2014.

Ethereum clearly shows his four development stages: Frontier, Homestead, Metropolis, and Serenity, and there is a lively exchange of views in the community over that policy.

As of 2020, we are working towards the final stage.

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In 2013, Buterin will publish an Ethereum white paper.

Then in July 2014, he pre-sale for 42 days in exchange for Bitcoin with Ether to raise development funds.

As a result, about 60 million ETH was sold and about 32,000 BTC was successfully collected.

After a one-year preparation period, full-scale development started.

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1. Frontier

Ethereum was opened to the public on July 30, 2015.

At the frontier, Ethereum has been released with specifications for developers.

This is because the intention was to leave an option so that if a defect is found on Ethereum, it can be redone.

Mining also started when the first block was generated.

Mining rewards at the time were set at 5 ETH, and mining with ASIC-resistant algorithms was designed to be done by the CPU and GPU.

Around this time, several projects have already started on the Ethereum platform.

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2. Homestead

On March 14, 2016, six months after the frontier, after confirming stable operation of Ethereum, the upgrade to Homestead, the second stage of development, was carried out.

With the completion of the transition to Homestead, the projects that had been watching until then will also enter, and various attempts will be seen on Ethereum.

Among them, the project that attracted attention was “THE DAO”, which aimed to launch a venture fund that manages assets without complicated procedures and auditing institutions using smart contracts.

However, in June 2016, an incident occurred in which someone stole Ether worth about 500 million dollars by exploiting a defect in “THE DAO”.

In this situation, the Ethereum community proposes to carry out a hard fork to save the victim, delete the transaction record of Ether allegedly stolen by the hacker from the blockchain, and then return Ether to the victim.

The hard fork was carried out, although some in the community opposed this measure.

However, although the victim was saved, his THE DAO failed.

At this time, some groups who did not agree with the hard fork will operate a virtual currency different from Ethereum under the name Ethereum Classic.

It was an incident in which a decentralized organization without a decision-making body faced the dangers and difficulties of carrying out a project.

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3. Metropolis

The third stage of development, Metropolis, will consist of its two upgrades, Byzantium in 2017 and Constantinople in 2019.

Through Metropolis, Ethereum was prepared for increased anonymity, increased security, and a final development stage where the PoW to the PoS transition was planned.

Aiming to improve anonymity, a technology called zero-knowledge proof introduced by the anonymous currency Zcash has also been introduced to Ethereum.

A zero-knowledge proof is a technology that can prove the legitimacy of a transaction without disclosing privacy-related information such as the address used for the transaction and the amount of money sent.

Not only is it effective in protecting privacy, but it also makes it difficult to find and attack specific transactions from the outside, which is expected to improve network security.

In preparation for the serenity, the difficulty level of mining, the difficulty level was reduced and the mining reward was reduced.

This allows miners to approve transactions to process transactions faster than before, resulting in faster generation times per block and faster processing on Ethereum.

On the other hand, easier mining will lead to an increase in the rewards received by miners and the resulting intensification of mining competition.

Therefore, measures were taken to reduce the mining reward from 5 ETH to 3 ETH on his Byzantium and from 3 ETH to 2 ETH on Constantinople so that the rewards received by the miners would not change significantly.

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