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Five Years of Ethereum: From a Teenage Dream to a $38B Blockchain

Five Years of Ethereum: From a Teenage Dream to a $38B Blockchain

How far has the Ethereum blockchain come in the five years since its inception? We explore key developments, changes and challenges.

It would seem that five years is a relatively short time for an information technology company,

but Ethereum has made colossal progress during this time, growing from its own initial coin offering project to the largest blockchain platform, running about 2,000 decentralized applications. Today, the market capitalization of its native cryptocurrency, Ether (ETH), is worth $38 billion — larger than Ford Motor Company and the popular app Snapchat. Not only that, but the value of Ether has seen a 121-fold increase over the period of the network’s existence. While the whole team is preparing for the transition to the proof-of-stake consensus algorithm ahead of the upcoming Berlin upgrade, Cointelegraph recalls the striking changes that have occurred to the platform over the five years since its launch, and the failures that have only toughened its resolve.

2013/2014: An idea to an $18 million crowdsale 

Ethereum was invented by Vitalik Buterin, a Canadian programmer of Russian descent. It was 2013, and Buterin was just an 18-year-old teenager, but his idea found a lively response in the global blockchain community. Later, Gavin Wood, a British computer programmer, proved the possibility of creating the system invented by Buterin and described the basic principles of its operation in the Ethereum “Yellow Paper.” Together with the first members of the Ethereum team, they launched a crowdsale and raised $18 million for the project’s development.

2015: Network launch and exchange listing

The first version of the Ethereum cryptocurrency protocol, called Frontier, was launched on July 30, 2015. But the security level the system boasted back then was far from what Ethereum is today. The launch of Frontier marked an important milestone in the history of the network, after which the developers immediately started working with smart contracts and creating DApps on the real blockchain. The first existing historical record of Ether’s price is from Aug. 7, 2015, when ETH was added to the Kraken crypto exchange at $2.77 per coin. Over its first three days of trading, its price dropped to a demeaning $0.68, most likely under the influence of rapid sales by early investors. In the second half of the year, droves of crypto enthusiasts rushed to learn what they could about Ethereum. A particularly significant contribution to its popularization was made by the DEVCON-1 developer conference, which was held from Nov. 9 to 13. The event sparked intense discussions on the development of Ethereum, with the participation of representatives from IBM, Microsoft and UBS.

2016: The DAO, hackers and Ethereum split

At the beginning of 2016, the price of Ether rose rapidly, fueled by news of the upcoming launch of a network protocol with a more stable version: Homestead. As a result, ETH reached its first serious high of $15 per coin on March 13, with the platform’s market cap exceeding the boastful $1 billion mark. On March 14, Homestead went live, which made its blockchain officially secure through new protocols and network changes (EIP-2, EIP-7 and EIP-8), making future updates possible. More specifically, the network protection became based on mining, which was planned only for the initial stage of development with subsequent transition to PoS with a hybrid model at an intermediate stage. At the same time, exuberant requirements for video memory acted as protection against the use of ASIC miners. The next event, which brought the price of Ether to its highest value that year — $21 — was the widespread media coverage of the dizzying success of The DAO project, which raised more than 12 million ETH ($150 million at the time ) in May. The DAO — an acronym for decentralized autonomous organization — was one of the pioneers of the upcoming ICO era and chose Ethereum as its launchpad to raise investments.

However, on June 16, using a vulnerability in The DAO’s code, unknown hackers stole about $60 million in ETH from the project. News of the attack sliced the price of ETH in half to $11. Buterin offered to return the stolen funds by conducting a hard fork to restore the network to its pre-attack state. Following a controversial hard fork held on July 20, the network split into two: Ethereum and Ethereum Classic. On Sept. 22, Ethereum suffered another blow: The network was subjected to a distributed denial-of-service attack, significantly slowing its operations. The news became an impetus for the beginning of a local downtrend in the curbed price, which began consolidating in the $7–$9 range by the end of the year. Two unplanned hard forks were then carried out to improve the resilience of the network and rectify the consequences of the DDoS attack.

2017: ICO boom 

Ether’s price experienced a meteoric rise at the start of 2017 as the cryptocurrency was added to the eToro platform on Feb. 23. Around the same time, the number of unconfirmed transactions on the Bitcoin network had reached 200,000, causing an increasing number of crypto investors and miners to opt for Ether as an alternative investment. On May 6, the price of ETH set a new bar of $95 per coin. The popularity of Ethereum grew rapidly in the crypto community and among DApp developers. The initial coin offering hype also contributed to the increased demand for Ether, as thousands of projects opted to fundraise in ETH. By Sept. 1, the price of Ethereum had almost reached a whopping $400, but news of China banning ICOs and crypto trading quickly slashed it to nearly $220. The price gradually recovered by mid-October after the release of the Byzantium network upgrade, which took place on Sept. 18. Along with the growth of the ICO bubble, in which Ether was still the main means of payment, ETH reached nearly $800 by the end of the year.

2018: Ethereum at $1,400 and a bearish trend

The beginning of 2018 turned out to be even more successful for Ethereum than the previous one. On Jan. 13, the price of Ether reached its all-time high of around $1,400. But the ICO rush, which had triggered the rapid growth of Ethereum’s price in 2017, came to an end. Throughout 2018, its echoes played a cruel joke on Ether as thousands of ICO projects sold their savings, meaning that ETH dropped even faster than the rest of the market. In early September, news of the Constantinople hard fork — expected in November — slowed the drop in the price and injected positive sentiment into the community. However, the network upgrade was delayed. Influenced by inter-bearish sentiments on the crypto market and pending updates, the price fell to $85, dropping from the second-largest to the third-largest cryptocurrency by market capitalization behind XRP.

2019: Technical works, update delays and popularity of DAOs

Many aspects spiraled out of the control of developers over the year as they were actively engaged in conducting technical work on the network. Meanwhile, the community lost count of the number of upgrades carried out. In January, the technical roadmap gained clarity as difficult engineering problems were solved and the Ethereum development community continued to grow. DeFi became the largest sector within Ethereum, and the market saw early signs of growth in gaming and decentralized autonomous organizations. At the beginning of 2019, the only DeFi protocol with significant funds was MakerDAO, which had a total of 1.86 million ETH ($260.4 million at the time). The playing field became much more diverse by the end of the year when new participants rushed into the industry.

On Feb. 28, the Constantinople hard fork took place on the Ethereum network, which prepared it for the transition to the Casper PoS protocol and the abolition of the previous mining model. However, the eighth upgrade, called Istanbul — which initially had been scheduled for Dec. 4 — was delayed and activated on the Ethereum mainnet on Dec. 8.  Among the main objectives of Istanbul were ensuring the compatibility of the Ethereum blockchain with the anonymous Zcash (ZEC) cryptocurrency and increasing the scalability of the network through SNARKs and STARKs zero-knowledge-proof protocols. In addition, the update made it difficult to carry out denial-of-service attacks on the network due to the change in the cost of gas needed for launching operating codes.

The progress of Ethereum 2.0 laid the foundation for the world’s largest corporations to start using the Ethereum blockchain. In July, Samsung released a software kit for Ethereum developers, six months after it was revealed that the development of its new phone included a built-in Ethereum wallet. Another large partnership involved internet browser Opera, which had launched an Ethereum-supported Android wallet at the end of 2018 and announced a built-in Ethereum wallet for iOS users in early 2019. Meanwhile, Microsoft continued its involvement with the Ethereum ecosystem. In May, the company released the Azure Blockchain Development Kit to support Ethereum development. In October, it backed a tokenized incentive system from the Enterprise Ethereum Alliance for use within enterprise consortiums. And in November, it launched Azure Blockchain Tokens, a service that lets enterprises issue their own tokens on Ethereum.

2020: The DeFi boom and PoS 

In the first half of 2020, Ethereum — famous for its numerous conferences and meetups — was forced to postpone all activity due to the coronavirus pandemic. Nevertheless, the team managed to make significant progress in solving the scalability issue, with the launch of the final Ethereum 2.0 testnet scheduled for Aug. 4. The developers hope that once the upgrade is complete, the Ethereum network will become faster, cheaper and more scalable without compromising decentralization and network flexibility. Meanwhile, the blockchain network continues to grow, as activity in the decentralized finance market has increased significantly. According to Dapp.com, the daily volume of value transferred via DeFi applications reached an all-time high of $1.8 billion on July 2. During the second quarter, a record $4.9 billion was moved through DeFi applications — a 67% growth when compared with the previous quarter — while the number of active users of Ethereum applications reached 1,258,527, an increase of 97%.

Article Produced By
Julia Magas

Julia is a researcher/journalist who covers the latest trends in finance and technology. Since 2013, she has been researching the cryptocurrency market and coordinating international conferences. Julia’s works are featured by popular fintech magazines, including Investing, SeekingAlpha and Bitcoinist, where she interviewed representatives from MIT, Indeed, Ethereum and more. She's trading some stocks and digital currencies for experimental purposes and hunting for the most interesting, cutting-edge technologies' use cases in investing and finance.

https://cointelegraph.com/news/five-years-of-ethereum-from-a-teenage-dream-to-a-38b-blockchain

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We’re Living in an Ethereum World

We’re Living in an Ethereum World

Wow! Look at it go! I’m talking, of course, about crypto’s ever-expanding market cap, touching US$800 billion as I write these words. Yes, that’s very close to a trillion bucks. And it’s still growing. At the start of the year (just over 5 days ago), we sat around US$670 billion, when seemingly out of nowhere, we all started watching the Ethereum (ETH) funds in our digital wallets expand in fiat value.

A World of Smart Contracts

As its market capitalization skyrockets – first to US$750, then to US$1,000 – Ethereum may not be finished yet. But ETH isn’t the only game in town. Altcoins utilizing the Ethereum blockchain, incorporating smart contracts into their peer-to-peer platforms, are also benefiting greatly from the influx of cash into our favorite exchanges. As an example, Ethlend (LEND), a little-known lending platform based on ETH and ERC20 tokens, has more than doubled in price with the new growth. The price of Tron (TRX), a planned digital media platform that will transfer user information across games, social media sites and even casinos, shot up from 5 cents to over 20 (quadrupling once again) in the initial stages of this new cash influx (yeah, I know, it’s fallen a bit since). But these aren’t the only examples. Go ahead and look at your own wallet(s) if you haven’t in the last week or so. You might be surprised at what you find. It seems it’s an Ethereum-based world we live in now, and this doesn’t look to be the regular pump-and-dump kind of action we came to expect from the half trillion-dollar market of yesteryear.

Predictability in the Market

Better still, the rise of all of our favorite altcoins (I’m thinking outside of the mainstream coins on Coinbase here) is happening on a somewhat predictable schedule associated with the slight dips we see in the price of Ethereum. In this new crypto-universe, it seems money no longer holds fast to Bitcoin’s (BTC) gravitational pull. Instead, after transferring Ethereum over to the exchanges, it is traded out to some degree for these smaller, lesser known coins. And why not? How many quadruplings, how many 1,000% gains, have to occur before we all realize where the real money is in the crypto space?

Bitcoin (BTC) is Still King

With great reward comes great risk, however. And as we dip our toes into the expanding options offered on these burgeoning exchanges (I’m looking at you, Binance), we should both fear and respect the influence of the king, Bitcoin. After all, with this much money in the market, there should be no doubt any longer that Bitcoin has survived the shock of winter and is coming right back to secure its place at the top of the heap (not that it ever lost its position). And when BTC rises, the influence of Ethereum is again lost (if only temporarily). And with Lite-speed (we see you, Litecoin), our gains from the day seemingly vanish as the masses clamor to secure their wealth in this awesome powerhouse of value. With that said, you’d better believe that Bitcoin is still very much king around here. It’s just not the only player in town anymore.

Conclusion

So whether you are an Ethereum or a Bitcoin believer, chances are that you will do well this year, as there just may be room for both with this brand new market cap. For Ethereum, the utility of the product and its derivatives are undeniable. The smart contract and its effects on all of our lives will no doubt be solidified and documented throughout the year(s). And as for Bitcoin, the ultimate storage for our coveted satoshi, we should probably all still pay homage when we’ve reached a comfortable level of gains in the alternative currency market (if we wish to keep them).

Article Produced By
Micah C. Miracle

https://themerkle.com/an-ethereum-eth-based-world/

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Ethereum Price Analysis for June 23th – ETH May Go On Growing

Ethereum Price Analysis for June 23th – ETH May Go On Growing

if the current impulse preserves. On Tuesday, June 23rd, it is generally trading at 241.90 USD. On D1, ETH/USD is winding up a correction in an uptrend. The quotations keep trading near the lower border of the ascending channel. The price presently remains between 61.8% and 100.0% Fibo. The MACD remains above zero. Judging by all the factors, we may expect a minor correction to the lower border of the ascending channel and a bounce off it, after which the pair will go on growing. The aim of the growth remains at 265.00 USD. On H4, the pair is also correcting in an uptrend. The Stochastic has formed a Golden Cross, which may be an additional signal of a bounce off the lower border of the ascending channel. The growth is aiming at 265.00 USD. However, a deep correction to 220.00 USD is also possible.

The story with those huge commission fees paid by an ETH user would not end. It has become known that the Chinese mining pool F2Pool found a way to return 540,000 USD to the validator. On June 11th, the user transferred 753,000 ETH, for which they had to pay half a million dollars more as a commission fee. The next day, they got in touch with the mining pool and managed to confirm their personality. It turns out that the wallet of the client got attacked – this was the reason for the ridiculous fee. The initial address of the client is obviously controlled by the hackers, so the pool considered it unreasonable to send the money back there, so the commission fee was returned to a new address. Curiously enough, the user gave 10% of the sum to the pool as a thank you for cooperation. It is hard to ignore the fact that in the crypto world, huge commission fees are collected for minor sums more and more often. This signals that the weak points in the nodes and safety systems have become available to hackers.

Article Produced By
Dmitriy Gurkovskiy

Chief Analyst at RoboForex

https://themerkle.com/ethereum-price-analysis-for-june-23th-eth-may-go-on-growing/

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Ethereum’s Vitalik Buterin challenges forecast saying the halving may boost Bitcoin’s price, joining stock-to-flow critics

Ethereum’s Vitalik Buterin challenges forecast saying the halving may boost Bitcoin’s price, joining stock-to-flow critics


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If you were to ask a Bitcoin investor what makes the cryptocurrency valuable, they would likely say something about the cryptocurrency’s block reward “halvings.” Every four years, the number of BTC issued per block gets cut in half, resulting in an effective 50 percent reduction in the inflation rate of the cryptocurrency. The argument is that halvings skew the supply-demand dynamic in favor of price appreciation as these events effectively reduce market supply. Yet according to Vitalik Buterin, the founder of Ethereum, the narrative is somewhat flawed in that it is “unfalsifiable.”

Ethereum founder discusses issues with Bitcoin’s halving narrative

On Jun. 14, the Russian-Canadian crypto wunderkind took to Twitter to challenge the narrative, opining that the “halvings cause BTC

price rises” theory is “unfalsifiable.”

“The ‘halvings cause BTC price rises” theory is unfalsifiable: Was the peak before the halving? Then it ‘rose in anticipation of the halving’ During? ‘Because of the halving’ After? ‘Because of…’

He’s saying that believers in the sentiment that Bitcoin halvings affect price in a positive manner can “move the goalposts,” so to say, by attributing any rally in the BTC price as an effect of a halving. To give an example of why he thinks the theory is flawed, he pointed at Bitcoin’s $20,000 peak in 2017, reminding people that “the last $20k peak was near the halfway point between the 2016 and 2020 halvings.” Bloomberg’s Joe Weisenthal, who has been commenting on cryptocurrencies for years now,

echoed this in February by writing:

“[Someone] wants to propose a bet on whether the Bitcoin halving will prove to have been priced in. Problem is it’s hard to define a clear test for that, because defining why any asset moves in any circumstance can be extremely difficult.”

Both Weisenthal and Buterin are critics of the Stock-To-Flow (S2F) Model, which predicts that Bitcoin will rally to $100,000 in the coming two years due to the halving. Buterin doubled down on his criticism of the subject on Jun. 14 by saying that he “disagrees with S2F.”

There are other reasons to be bullish

That’s not to say that there aren’t any active factors boosting the Bitcoin bull case. Far from, actually. As reported by CryptoSlate previously, Bloomberg senior commodity strategist Mike McGlone wrote in a report published at the start of June that “something needs to go really wrong for BTC not to appreciate.” His bull case boiled down to a number of factors that include but are not limited to, Bitcoin’s decreasing volatility, the increasing adoption of BTC futures on the CME, Grayscale Investments‘ Bitcoin investments, a high correlation with gold, central bank money printing, and there being similarities between the start of the 2016-2017 rally and today.

Article Produced By
Nick Chong

https://cryptoslate.com/ethereums-vitalik-buterin-challenges-forecast-saying-the-halving-may-boost-bitcoins-price-despite-stock-to-flow-critics/

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Ethereum Classic (ETC) To Test Atlantis In June

Ethereum Classic (ETC) To Test Atlantis In June


The Ethereum Classic (ETC) network is gearing up for a network upgrade,

as its developers are ramping up their plans to introduce the “Atlantis” upgrade. The development team held a developer call on June 6, where they discussed the intention to pull forward the testnet activation of the upgrade. The upgrade could be accelerated to as close as June 19, instead of the initial release date of early August.

ETC developer, Soc1c, said,

The July 1st target is off. No need to further discuss that. We have agreed on testnet and can still decide on mainnet.

Speaking to CoinDesk, Soc1c elaborated on the future of the network,

I can’t tell what the future will bring. For now we agreed to fork the testnets with everything included in [Atlantis] as it is, and reserve the option to modify mainnet spec and date in a subsequent call.

Atlantis would bring a few major upgrades to the network, with one of the key focuses being interoperability between the Ethereum Classic and Ethereum blockchains that would allow for dapps to migrate between the two blockchains. This news has emboldened investors, who feel that a mainnet arrival looms closer now that development is ramping up.

Article Produced By
Abhimanyu Krishnan

Abhimanyu is an engineer on paper but a writer by living. To him, the most celebratory aspect of blockchain technology is its democratic nature. While he’s hodling, he can be found reading a good book or making the local dogs howl with the sound of his guitar playing.

https://www.investinblockchain.com/ethereum-classic-etc-to-test-atlantis-in-june/

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Ethereum Soars Over 125% Since March: What to Expect Now?

Ethereum Soars Over 125% Since March: What to Expect Now?

Almost all markets across the world have been in turmoil owing to the economic uncertainties

brought about by the coronavirus pandemic, and in that regard, the crypto market has been no different. However, one of the major cryptocurrencies to have made a remarkable recovery since hitting its lowest levels in March is Ethereum (ETH), and it is important to take a closer look at it. In this regard, it should be noted that ETH is the second-biggest cryptocurrency in the world, and its recovery might have an impact on the wider crypto market.

Major Triggers

The recovery has been quite remarkable, and it is only natural that investors are taking note of Ethereum since it rose 125% from its lowest levels. In a new development, it has now emerged that Grayscale Investments has acquired as much as half of all the ETH tokens that had been mined this year. The actions of Grayscale could well be one of the major reasons behind the rally enjoyed by the cryptocurrency this year. According to a post that was published on Reddit, Grayscale now owns 1.1% of all the ETH tokens that are currently in circulation. It is a significant development for ETH and marks the entry of an entity that looks after the interests of institutional investors. Grayscale is currently focused on a total of 10 cryptocurrency-related investment products and primarily caters to the interests of institutional investors.

ETH is in Focus Ahead of Ethereum 2.0: What to E#xpect?

At this point, Grayscale has investments worth $2.7 billion in its books, and out of that, the Ethereum Trust consists of investments to the tune of $234.7 million. It needs to be kept in mind that over the years, it has been said that the flow of institutional money is going to be the main trigger behind the growth of the crypto market, and it seems like perhaps this is finally happening. It remains to be seen how this latest development affects the attitudes of other investors with regards to Ethereum.

Article Produced By
Ankit Singhania

Based in India, Ankit is a financial content writer and stock market analyst. He has worked for almost a decade on several financial projects related to the stock market news, fundamental research and technical analysis for several websites. He obtained his Masters Degree In finance (MS – finance) from ICFAI. Currently, he serves as a financial consultant and technical analyst at Tradersinsights.com.

https://cryptocurrencynews.com/ethereum-soars-expectations-04-28-20/

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What is Ethereum? The ULTIMATE Research-Backed ETH Guide

What is Ethereum? The ULTIMATE Research-Backed ETH Guide

So what exactly is Ethereum?
Ethereum is the leading blockchain app platform that was proposed in 2013 by Vitalik Buterin and went live on July 30, 2015.

There are many different strands to this project and getting your head around it all can be quite the challenge. That’s why we have put together this comprehensive guide for those of you wondering “What is Ethereum?” and “How does Ethereum Work?” As the harbinger of the second generation of blockchains and home to the second largest digital currency in the world, Ether (ETH), the Ethereum project has started a new era of blockchain development that enables a global community of developers to unleash their creativity in the space. The ability to craft smart contracts gave developers a chance to think about new use cases for blockchain technology that previously remained largely connected to cryptocurrencies.

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.Ethereum also gave enterprises, organizations, and startups the ability to issue their own tokens, and build their own unique blockchain ecosystem using the Ethereum framework. Till date, Ethereum-based ERC20 tokens have been the most popular means for launching Initial Coin Offerings. Of course, Ethereum is still in development and has faced some hurdles. It has faced problems related to scalability, which was highlighted when the popular game dedicated to internet-bred cats called CryptoKitties managed to clog its network in December 2017. However, with a unique concept, upcoming developments, a strong developer community and the first-mover advantage (second only to the mighty Bitcoin), Ethereum is one blockchain project that continues to remain at the forefront of DLT and crypto development.

So… What is Ethereum?

In a nutshell, Ethereum is an open source Smart contract and Decentralized Application Platform. The Ethereum whitepaper describes the project as the next generation distributed computing platform, that provides a decentralized virtual machine known as the Ethereum Virtual machine EVM. The latter is able to execute Peer-to-Peer contracts by means of Ether (ETH), its proprietary crypto fuel. Blockchain technology is used as a tool of shared consensus, while Ether is the digital asset that is used to pay for transaction fees and computational services.

What’s the Difference Between Bitcoin and Ethereum?

Since the advent of the Ethereum project in late 2014 and its explosion of popularity within the confines of the nascent crypto space and beyond, Ethereum has always been compared to Bitcoin. All being similar to the use of Blockchain as the underpinning technology, both projects are fundamentally different. The main difference between them is the purpose of each one. In fact, Bitcoin was built as an alternative to regular money. Bitcoin can be used as a medium of value exchange, a means of payment and a store of value with no central authority to issue or control it and no intrinsic value or physical existence. On the other hand, Ethereum is rather a platform for developers to build and run Peer-to-Peer executable contracts and decentralized applications. Block time generation (seconds in the case of Ethereum and minutes in the case of Bitcoin), the rate at which new coins are mined (constant in Ethereum and halves every 4 year in the case of Bitcoin), the proof of work hashing algorithm (Ethhash in Ethereum, and Sha 256 in Bitcoin), and the total supply (capped to 21 millions in the case of Bitcoin and uncapped in that of Ethereum) are the other differences that set both projects apart.

The Ethereum Virtual Machine

The Ethereum Virtual Machine (EVM), is a 256-bit quasi-turning-complete virtual state machine that forms the runtime environment for smart contracts and specifies the execution model for such contracts. The machine is stack based, altogether separate from the main Ethereum Network, and has its own independent storage model. In fact, all the nodes on the Ethereum Network run the EVM in addition to validating transactions. The EVM could be seen as a testing ground for Smart contracts because once these contracts are deployed to the mainnet, such a step can’t be reversed. Any developer that wants to build on Ethereum, could deploy his/her untested code on this network of computers and see how it muddles along.

Ether (ETH) and Gas

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.In Ethereum each operation or work performed by the network has a cost assessed by the network which is known as a gas limit. In order to execute a smart contract, for example, developers need to pay for all the operations featured in their code. Sending Ether from one wallet to another one involves four gas units. These gas units are checking your balance, transferring ETH to a receiving address, subtracting ETH from your balance and adding ETH to the receivers.

So gas units refer to the smallest measurement of work needed to settle a given operation but don’t have a monetary value. The cost is paid in Ether. Gas is that unit that translates into Ether. Since Ethereum can only compute a limited number of gas units at any given time, miners are sort of bribed by network users to pace up the stream of request that is being sent over to the network. To pay miners, small fractions of ETH named Gwei are attached to each gas unit, which sets the gas price. What everyone should remember is that the gas price is how much you pay per gas unit, and the gas limit is how much work you are requesting from the network.

Smart Contracts – What Are They and How Do They Work?

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.Smart contracts refer to computer codes that facilitate the exchange of value whether it is money, property or content. They are called contracts because they translate the terms of an agreement, and smart because they automatically execute themselves once specific triggers are met. The notion of smart contracts was around way before the advent of Bitcoin or Ethereum.Simply put smart contracts are just like regular contracts in the real world, where two parties or more agree to specific terms of an arrangement and commit to sticking to it once signed. The main difference is that Smart contracts are fully digital. Furthermore, when running on a Blockchain like the Ethereum Network, a smart contract acts as a self-operating computer code that automatically executes itself once specific conditions are met. Blockchain-based smart contracts are immutable and would run exactly as programmed once deployed without any possibility of censorship, downtime, reversing, or third-party interference.

Other Blockchains Which Utilize Smart Contract

Smart contract enabling Blockchains are regarded by many as the “real deal,” this whole Blockchain revolution came up with since its rise to prominence. Put by Nick Szabo, the blockchain pioneer,

himself:

“New institutions and new ways to formalize the relationships that make up these institutions are now made possible by the digital revolution. I call these new contracts “smart” because they are far more functional than their inanimate paper-based ancestors. No use of artificial intelligence is implied. A smart contract is a set of promises, specified in digital form, including protocols within which the parties perform on these promises.

We crafted a list of ten blockchains, other that Ethereum, that support Smart Contract programming and deployment.

  • Cardano: a project that caught a lot of media attention, and that is allegedly developing a smart contract platform that seeks to deliver more advanced features than its competitors do.
  • EOS: a Smart Contract platform for industrial scale dApps deployments through a DAO model, commonly referred to as the alternative to Ethereum.
  • NEM: written in Java, the NEM platform is arguably one of the simplest to use since no specific platform programing language is required to code and deploy smart contracts on it.
  • Waves: the underdog of this list, it is an open source smart contract platform that focuses on scalability and speed of settlements.
  • Other interesting blockchain projects that could play an important role in the future of smart contracts, are Hyperledger Fabric, Lisk, NEO, Qtum, Stellar Lumens, and Tezos.
Ethereum Use Cases

Smart contracts make Ethereum flexible, providing it with more real-world use cases than its predecessor Bitcoin. A combination of smart contracts and dApps keep developers intrigued and users interested in the network. According to ConsenSys, some industries and sectors where use cases for Ethereum can be found include:

  •   Banking and Financial Services:

Large banks routinely spend more than $200 million per year on cybersecurity. If the servers of a central bank were to go down, you would see the collapse of a country’s payment clearing system. However, if every bank within a payment network instead transacted through a blockchain, there would be no single point of failure. Therefore, a country’s interbank payment network could be maintained even if multiple servers were to go down. Also, because the basic idea behind blockchains- creating a distributed, public and immutable ledger with a never-to-be-tampered with the record of transactions remains the same, the data behind the credit score of a user becomes more reliable for financial companies. Related industries like insurance can also be hugely benefitted as they can disburse payments more easily to their customers.

  •   Startups and ICOs:

Ethereum empowers startups by letting them launch their own Initial Coin Offerings (ICOs). These tokens, usually created using the ERC20 protocol, help startups in raising the funds needed to realize their goals. Interestingly, one of the largest crypto exchanges and companies in the world, Binance, used funding generated through the sale of BNB, a coin that follows the ERC20 standards. Even Tron, one of the largest blockchain projects in the world started out with an ERC20 token offering.

  •   Digital Identities:

Since data and identity theft is such a menace, a smart contract solution is a good fit for this problem. Using information hidden behind a dedicated smart contract, users could not only take their identities digital but rest assured that they do not reveal more than what they are comfortable sharing. Services like uPort allow users to take back control of their identities and share only the information they choose through their mobile devices. Information can only be shared upon authentication from the user and the data is always stored safely on the Ethereum blockchain.

  •   Supply Chain:

A major application for Ethereum smart contracts looks set to be in supply chain management where it could benefit both consumers and suppliers through more efficient tracking. Whether you want to know about the freshness of produce or the origins of the diamonds you bought for your wedding, blockchain-based smart contracts can help to deliver this. The supply chain system of the world is currently broken but not beyond repair. Using an extensive network of smart contracts, companies can track their raw materials and the transportation of goods. They can accurately measure their manufacturing processes, related logistics and the process through which a product reaches a consumer. The consumer, on the other hand, is provided with reliable information that instantly proves whether a product is fresh, authentic, fair trade, locally produced and more.

  • Other major industries and applications where Ethereum could find many uses include Real Estate, Law, Oil and Gas, Energy Grid, Government, and Commodity Trade Finance and more as stated by ConsenSys.
Ethereum’s Most Popular dApps

Here are some of the most popular dApps that run on the Ethereum blockchain:

  •   CryptoKitties:

The internet’s obsession with cats knows no bounds and when CryptoKitties was launched, it was evident that there would be more than a handful of interested players.A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.The game allows players to buy, sell, collect, and breed digital cats. Each cat is unique and has its own value. CryptoKitties received widespread attention from the media, the crypto community and the “uninitiated” people who may have never heard about cryptocurrencies and blockchains before when cats on the game started selling for thousands of dollars. CryptoKitties remains one of the most popular dApps and should be credited for evolving the scope of dApps from “work” to “play” while adding value to “digital asset ownership.”

  •   LocalEthereum:

The second-generation blockchain cousin of LocalBitcoins, LocalEthereum solves one BIG problem for buyers- removing middlemen from the crypto ecosystem. You buy ETH over the counter using smart contracts and escrow services available on the platform. The seller’s Ethereum is locked via a smart contract and is released only when they receive the agreed fiat currency from the buyer.

  •   IDEX:

The IDEX decentralized exchange is considered by some a thing of beauty, especially as it introduces Ethereum users to the idea of giving up on “centralized exchanges.” Some of the most popular dApps on Ethereum are decentralized exchanges- they are new, innovative and remove a big hurdle from the world of digital currencies, providing more power to the users. The first adopters of IDEX were speculators, and the exchange enables a huge range of Ethereum and ERC20 tokens to be traded and exchanges. However, popular cryptocurrencies such as XRP, Litecoin, Bitcoin and Tron is not possible.

  •   Ethlance:

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.Giving other freelancing job platforms a run for their money, Ethlance allows users to work on gigs or projects of their choice without paying a hefty fee. This could mark the beginning of the end of freelancers having to give away over 20% of their earnings to centralized platforms such as Upwork in “fees” and part with even more dollars to get the money in their local currency. Ethlance, the decentralized freelance hiring platform allows you to work for zero fees. The only payment here is the gas utilized on Ethereum.

  • Other popular Ethereum dApps include FCK, Kyber, ForkDelta, Etheroll and more.
Pros and Cons of dApps

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.

The pros – Here are some of the key benefits of decentralized applications:

  1. Fault tolerance – Systems use redundancy to remove the risk of accidental failure. If one element goes down the network still works, this means applications can run with zero downtime.
  2. Attack resistance – There is no single point of failure, as the applications run on the blockchain. This makes them impervious to denial-of-service (DDoS) attacks.
  3. Tamper & corruption proof – Applications run precisely as programmed removing the possibility of fraud, censorship or third-party interference. This makes it more difficult for an individual or group to act for its own benefit at the expense of everyone else.
  4. No middlemen – This removes exuberant fees and allows users to interact directly with each other (peer-to-peer). This can lead to greater transparency, trust, and privacy.
  5. Open source –  An open source protocol enables anyone interested in the dApp to collectively contribute to its development for the benefit of everyone.

The Cons – Here are some of the negatives of decentralized applications:

  1. Speed – Currently the dApps can be quite slow with transactions also taking a long time.
  2. Scalability – The limit on how many transactions can be processed per second might be quite low which limits the dApps scalability.
  3. Fees – While in some ways the ‘compensating system’ is a benefit, it also means users have to pay each time they use the dApp.

It’s worth noting that solutions and new innovations are constantly occurring in the nascent dApp and blockchain industries, so the current ‘cons’ may well be overcome in the future.

The DAO Hack

The DAO was a project that crystallized most of what blockchain technology stood for since its inception, in both its business model and management structure. It was created in 2016 by members from within the Ethereum community, notably the Slock.it developer team. The DAO was conceived as a form of investor-oriented, stateless, decentralized venture capital firm after raising a record-breaking crowdfund sale of around $150 million worth of Ether in May 2016. Unfortunately, when things were looking up for the project, it turned out that there was a flaw in its source code, and that flaw was eventually preyed on. On June 17, 2016, some hacker(s) exploited a loophole in the DAO smart contract and drained as much as 3.6 million ETH (around $70 million at the time) to a subsidiary account in just a few hours of the attack.

In fact, the attack was found to be made possible when the hacker(s) realized that the smart contract was mistakenly coded to check the internal balance after sending coins not the other way around. The attacker(s) proceeded by requesting funds from the smart contract several times before the smart contract could update its balance. The hack marked the beginning of the end for the DAO and had far-reaching consequences on the Blockchain space that are still tangible today. Besides delisting the DAO token off major exchanges in the months following the hack, and hard forking the Ethereum main chain, the incident caught the eye of regulatory watchdogs all over the world, and put a special emphasis on the necessity of placing the cryptosphere under close scrutiny.

Ethereum Classic Fork

In the wake of the DAO hack, the Ethereum community gathered and debated on the proper actions the foundation should take in order to handle the disastrous situation the hacking incident has cast over the project. The community split into two fundamentally opposed groups. While one side suggested a hard fork to contain the hack, reverse it, and send the stolen funds back to their original wallets, the other side strongly opposed the move invoking ideological reasons, and arguing that prevailing with the code and trusting the smart contract under all circumstances, is the philosophy behind Blockchain, and failing to commit to it, could open the door for similar actions in the future. A vote took place in July 2016 and the decision to implement a hard fork to the Ethereum code and move the stolen Ether away to a new smart contract was agreed upon by a vast majority of the community including co-founders Gavin Woods and Vitalik Buterin. Consequently, a hard fork occurred on the main Blockchain at height 1,920,000, right before the hacking incident took place. The offshoot kept the name Ethereum and named its fuel Ether, ETH. However, the other group, or “the code is law” advocates, decided to stick with the original chain, which became known as Ethereum Classic.

Ethereum Mining

Did you know that Google CEO Sundar Pichai’s 11-year-old son mines Ethereum? The young one, Pichai says, understands a lot about cryptocurrency and has corrected him on occasion. Do you know as much about Ethereum mining as Pichai’s son? Well if not, don’t worry as we have all the information you need here to boost your knowledge on the subject. In a nutshell, Ethereum mining is similar to Bitcoin mining. The concept of mining, i.e., giving rewards to “miners” who create new blocks in the network in the form of a native cryptocurrency of the blockchain, is the same. However, the Ethereum blockchain is faster than Bitcoin’s, which means that blocks are created at a faster rate. In the Bitcoin Network, a new block is created every 10 minutes while Ethereum achieves the same in 15 seconds. Miners on the Ethereum network receive ETH tokens along with all the gas contained within their block (gas is the fuel of all Ethereum transactions which manifests as code-processing and transaction fees on the blockchain).

Can You Mine Ethereum With ASIC?

Yes, it is currently possible to mine Ethereum with ASIC. However, an Ethereum Core Development meeting recently pushed forward a proposal called ‘ProgPoW‘ that would make Ethereum ASIC resistant.

How Many Ethereum Nodes Are There?

According to Ethernodes.org, the Ethereum mainnet hosts about 8,752 nodes at the moment. However, this figure changes on a daily basis. Of these, the largest majority of nodes are based in the USA while China, Canada, Germany, the UK, Russia, and more trail quite far behind.

Are These Nodes Full Nodes?

A full node is any computer that enforces all the rules of consensus on the Ethereum network and is connected to it. A full node must have the entire Ethereum blockchain downloaded on its computer. By definition, all miners in the Ethereum network have to be full nodes. However, all full nodes do not have to mine the currency.

The nodes have a few important functions.

  1. They have to ensure that all the miners are given the correct block rewards.
  2. They must ensure all transactions have the right signatures.
  3. They must check that all blocks and transactions are in the right data format.
  4. They must make sure there is no double spending in the blocks.
How Can I Use Ether (ETH)?

Ether is one of the most versatile coins available in the cryptocurrency space today. As the second largest cryptocurrency in the world, Ether has many holders. Per the most recent CoinMarketCap data, Ether is valued at over $15 billion with 104 million coins in circulation currently.

Here are few of the common uses of ETH:

  •   For making transactions:

Ether can be used as an alternative to using credit cards and wire transfers. However, to make a transaction with Ether both the sender and receiver must have an Ether wallet set up. For cross-border payments, Ether could work to be much cheaper and faster than traditional methods.

  •   For buying ICO tokens:

When participating in token sales, Ethereum is often a popular cryptocurrency of choice. As a large number of Initial Coin Offerings are offered using the Ethereum blockchain, it means that buying tokens from these projects using ETH becomes easier.

  •   For making purchases in the real world:

Several cryptocurrency startups are pushing for the adoption of digital currencies and helping in the installation of PoS machines and other methods that enable purchases using ETH.

  •   For making digital purchases:

Many websites now accept payment in Ether, and your dApps could also accept ETH payments, enabling you to purchase anything from extra lives in games to subscriptions of a magazine.

  •   For trading/investing:

Ether is one of the most commonly available trading pairs for digital currencies used in exchanges around the world. You can purchase Ether and hold it as an investment or exchange it directly for other cryptocurrencies.

How Can I Store Ether (ETH)?

Once you have bought Ether, you will need an Ethereum wallet to store it securely. You have the option to use hot wallets, cold wallets, hardware wallets, paper wallets, desktop or mobile wallets. There is one for all platforms; some options will be better suited in comparison to others.

Let’s look into each option:

  •   Hot wallets- exchange wallets:

You will most likely buy ETH on an exchange like Coinbase or Binance. These exchanges will provide you with a wallet where you can store your ETH. Exchange hot wallets are easy to use, very simple and it’s usually easy to liquidate your holdings since your coins can be accessed on the exchange’s website. Therefore, exchange wallets can usually be accessed from multiple devices as long as you have a connection to the internet. The problem with these wallets is that they could be more vulnerable to theft than others depending on the security of the exchange and your account. If you trade regularly, then this is likely the best and most convenient option.

  •   Cold wallets- hardware wallets:

Hardware wallets can offer their users extremely strong security when used correctly. They are usually USB devices, and the market leading provider of hardware wallets currently is Ledger. You can store your Ether holdings on a hardware wallet for as long as you wish and rest assured that they cannot be reached by a hacker. Just make sure that you do not lose the device or tell anyone else your passwords.

  •   Cold wallets- paper wallets:

Paper wallets are considered the most secure way of storing your Ether safely away from malware and cyber-attackers. With a paper wallet, you print your private keys and Ether addresses and store them in a safe location. However, to many, this can seem like a big inconvenience when compared to using an exchange wallet for example. Again, like with hardware wallets, it’s important to keep your paper wallet somewhere safe and never share the information with anyone else.

  •   Desktop and mobile wallets:

As the name suggests, desktops and mobile wallets can be distinguished based on the devices where they are being used. Desktop wallets can be more functional, while mobile wallets provide more convenience. Mobile and desktop wallets can usually only be used on the device where they are installed. Therefore, if you lose the device, this will put your funds at risk. Some mobile/desktop wallets will be specifically designed for storing Ether and ERC20 tokens, whereas some will allow you to hold a wide range of cryptocurrencies together.

Which Is the Best Ethereum Wallet?

Given that there is such a wide range of wallet options out there, it begs the question, which ones are best? Well, to help answer that question, here are some of our handpicked favorites:

  •   Hardware wallet – Ledger Nano S

The Ledger Nano S squeezes both advanced security and ease of use into one package. Our guide to storing cryptocurrencies securely on a Ledger Nano S can be found here.

  •   Desktop wallet – MetaMask

This simple, easy to install and easy to use browser-based wallet lets you connect to Ethereum and a host of dApps hosted on the blockchain instantly. MetaMask is a highly popular wallet which has also received funding and support from ConsenSys and Ethereum. Fake versions of this wallet are out there so make sure download a legit version.

  •   Basic Wallet – Mist Wallet

If you are looking for nothing but the bare basics, then the Mist Wallet is the right choice for you. It was created by the Ethereum Foundation for a no-frills, no-distraction experience and is listed as the most basic wallet available on ethereum.org.

  •   Multicurrency Wallet – Exodus

If you hold numerous cryptocurrencies and want a well-designed wallet that eliminates the need for multiple crypto wallets, then Exodus could be a good choice. Exodus is is fairly popular amongst crypto users and some cool features, including the portfolio feature where you can track your holdings.

  •   Web Wallet – MyEtherWallet

MyEtherWallet is one of the most popular Ether wallets out there. As a web wallet, it allows you to log in from any device, which does bring some security risks. However, these risks can be mitigated if it’s paired with a hardware wallet such a the Ledger Nano S.

  •   Mobile Wallet – Trust Wallet

Trust Wallet is now Binance’s official cryptocurrency wallet, and the app is available to download on both iOS and Android devices. It supports Ether and all Ethereum network tokens such as ERC20 tokens, as well as many other leading cryptocurrencies such as Dash, Tron, Litecoin, Bitcoin, and more.

Where Can I Buy or Sell Ethereum?

Cryptocurrency exchanges are the most common choice for buying or selling Ethereum.
Cryptocurrency exchanges can be centralized or decentralized.

The world’s three largest cryptocurrency exchanges are:

  1. Binance
  2. OKeX
  3. Huobi

Other prominent exchanges include:

  • Coinbase
  • Bitfinex
  • Upbit
  • Kraken
  • Digifinex

Ether is available to buy, sell, and trade on all of these exchanges. As Ether is a leading digital coin, it is available on most cryptocurrency exchanges.Different payment methods for purchasing Ether on exchanges include by credit/debit card, with fiat currencies, and with cryptocurrencies or stablecoins. The fees charged by different exchanges will vary and will also depend on the payment method. Other options include cryptocurrency ATMs where you can buy Ether with cash, trading Ether peer-to-peer on LocalEthereum, and using conversion exchanges like Changelly and Shapeshift to swap fiat-to-ether or crypto-to-ether instantly.

Is Coinbase Safe?

Coinbase is a leading and popular cryptocurrency exchange based in the US. Currently, over 18% of the platform’s volume comes from ETH/USD trades. For people using the exchange’s services, Coinbase provides a hot wallet which can be used to store currencies. Coinbase holds over 98% of its user’s funds offline and takes other security measures, which prevents thefts and hacks from damaging user’s holdings. Any funds stored online by Coinbase are covered by insurance.

Coinbase also enables two-factor authentication for the users, further protecting them from unauthorized access of accounts.
Coinbase also runs a bug bounty program with an active community of security researchers that help to keep the platform safe. None the less, some users still may want to take full control of their security rather than rely on an exchange. If so, using one of the secure methods mentioned above such as a hardware wallet or paper wallet would be a good option.

How Much Is Ethereum Worth?

As of February 21, 2019, the price of Ether currently stands at $143 with a market capitalization of  $15.2 billion. In November and December 2015, Ether traded below the $1 mark. However, a year later, between October and December 2016, Ether’s price was nearing $10. In June 2017, prices went as high as $377.56 with market capitalization reaching over $34 billion. on January 13, 2018, the price of Ether reached an all-time high near $1,400, with a market capitalization of $133 billion. Since then, Ethereum has witnessed a massive sell-offs and tumbling prices in an unwavering bear market. However, like with all markets, a boom and bust cycle exists, and now everyone is waiting for a new bull market, with hopes that Ether could one day make an all-time high again.

Ethereum Price Predictions From Big Names

Ethereum has caught the attention of many crypto enthusiasts as well as prominent personalities from the traditional finance sector. Some have also made predictions about Ethereum’s price. Let’s look at what they had to say.

Jeff Reed considers Ethereum more valuable than Bitcoin:
Crypto author Jeff Reed believes that Bitcoin and Ethereum have little in their way to stop them from becoming alternative currency systems.

He said:

“You can conceivably trade anything using Ethereum, but this is not Ethereum’s strength in comparison to other cryptocurrencies – they can all do this. It’s rather the computing language that allows the smart contracts to exist that makes Ethereum more valuable than BTC (in my opinion).”

Steven Nerayoff predicted $3,000:
Co-creator of Ethereum, Steven Nerayoff noted that billions of dollars were being poured into the Ethereum ecosystem in Jan 2018, through ICOs. He was vouching for a $3000 price tag on Ether by the end of 2018, but unfortunately, this did not materialize.

Nigel Green sticks to $2,500:
deVere Group CEO Nigel Green suggested that Ethereum could reach $2500 by the end of 2018, followed by further increases in 2019 and 2020.

He said:

“The price of Ethereum is predicted to increase significantly this year, and could hit $2,500 by the end of 2018 with a further increase by 2019 and 2020. This general upswing will be fueled by three mains drivers. First, more and more platforms are using Ethereum as a means of trading. Second, the increased use of smart contracts by Ethereum. And third, the decentralization of cloud computing.”

Who Is the Founder of Ethereum?

Russian-Canadian programmer Vitalik Buterin is the co-founder of Ethereum. Vitalik conceived the idea of Ethereum and released a white paper in 2013 describing in detail its design and rationale. Vitalik had already been interested in Bitcoin and cryptocurrencies since 2011. He co-founded the news website named ‘Bitcoin Magazine’ where he published hundreds of articles and was also involved with the privacy-focused Dark Wallet project. It was during this time that Vitalik came up with the idea of a single blockchain that could be reprogrammed to create custom decentralized applications rather than having to develop a whole new blockchain. In January 2014 Vitalik formally announced Ethereum at the North American Bitcoin Conference in Miami and started working with Dr. Gavin Wood who he went on to co-found Ethereum with. In July 2014 they launched a 42-day public sale of Ethereum tokens known as ‘Ether’ raising more than $18 million, which was the most successful ever crowd sale at the time. The Ethereum platform went live and launched a year later on June 30, 2015, allowing developers to start creating and running decentralized applications.

The Founding Team

Apart from Vitalik Buterin, other people were also involved in designing and perfecting the concept of Ethereum. The most prominent among them is doctor Dr. Gavin Wood who wrote the “technical bible” called Ethereum yellow paper, which outlines the details of the Ethereum Virtual Machine (EVM). Dr. Joseph Lubin is another prominent name who later built ConsenSys, a Brooklyn-based startup focusing on the Ethereum ecosystem. When the project was publicly announced in 2014, the core team consisted of Vitalik Buterin, Mihai Alisie, Anthony Di Lorio and Charles Hoskinson.

How Can Programmers Use Ethereum?

Ethereum is a single blockchain with a built-in programming language. It serves as a platform where programmers can create, use and run many different types of decentralized applications. This has led to Ethereum being described as ‘The World Computer’ where just like with conventional computers the potential uses depend in part on the creativity of its users. To get started, programmers can start learning more about the foundational concepts of blockchains- decentralization and cryptography. They must familiarize themselves with the key feature of the Ethereum blockchain, smart contracts, as well as other components like GAS, Ether (ETH), and the Ethereum Virtual Machine. Programmers will also need to learn Solidity, the programming language used for Ethereum.

What is Solidity?

Solidity is the programming language used for creating smart contracts on Ethereum. According to Blockchain Council, Solidity is a high-level programming language, and the syntax is similar to the JavaScript scripting language.What is Solidity? – Source: Blockchain Council Solidity was initially proposed by Gavin Wood in August 2014. It was then developed by Gavin Wood, Alex Beregszaszi, Christian Reitwiessner, Yoichi Hirai, Liana Husikyan, and other former Ethereum core contributors. It was designed to enable the writing of smart contracts on platforms like Ethereum. For programmers who are well versed in JavaScript or C, Solidity will seem relatively proverbial. While Solidity is a fairly new language, there are numerous experts working on it, and there is ample documentation available to help new programmers who want to learn the basics.

Ethereum’s Future Plans

Ethereum has struggled with some scalability issues which could be a hurdle to the widespread adoption of the platform and Ether. Ethereum wants to overcome these hurdles with Ethereum 2.0, the Casper Upgrade. The upgrade is expected to arrive in 2019. It will include concepts like sharding which is expected to make the blockchain faster and more efficient. Once successfully upgraded, Ethereum 2.0 will then start on its journey moving towards Ethereum 3.0 which will provide the network with security against the power of quantum computers.

Scaling

Scaling could be considered the Achilles’ heel of the Ethereum network; however, a lot of work is being done in the background to try and overcome this. As Ethereum is not just a single blockchain, it also allows users to create their own blockchain-based projects on the original Ethereum blockchain. urthermore, over 1400 dApps are running on Ethereum currently which means that the network already has a large number of users and processes millions of transactions.

The problem begins when the number of apps, projects, and users increases to a level where the Ethereum blockchain nodes are unable to handle the ever-increasing amount of transactions. In fact, when the CryptoKitties game on the Ethereum network went viral in late 2017, the network became congested and saw a 600% increase in pending transactions. This surge resulted in the network slowing down and expensive transactions fees, therefore, reducing the usability/viability of Ethereum applications.

The solutions currently being developed to overcome the scaling issue include:

  • Casper – The upgrade that will set to bring about Ethereum 2.0 and move Ethereum to a Proof-of-Stake protocol. It is expected to occur in 2019.
  • Sharding – Splits up the entire network into separate ‘shards’. Each independent shard and its allocated nodes can process certain transactions, rather than the entire network processing each transaction, therefore, increasing throughput.
  • Serenity – A new blockchain system that would be connected to Ethereum. The goal would be to move all the existing Ethereum applications here where they would be “sort of folded into a contract on one shard of the new system.”

 

Proof of Stake vs. Proof of Work

Proof of Stake (PoS) and Proof of Work (PoW) are two popular types of blockchain consensus mechanisms. A consensus mechanism is used to verify and validate the information that’s being added to the blockchain ledger. This ensures that there is no double spending or other invalid data is being added to the blockchain. It also prevents the networks from being harmed through constant forking. There are pros and cons to each consensus mechanism, but, they all aim to serve the same purpose. A primary difference between consensus mechanisms is how the verification of transactions are delegated and rewarded. Proof of Work vs Proof of Stake infographic by 3iQ Research Group. Ethereum currently uses a Proof of Work system, but the Casper upgrade will start the transition of Ethereum to a Proof of Stake system. The new system will also have a penalty system built in to punish malicious actors.

Good Audience state that:

“The penalty system has the additional benefit of deterring 51% attacks. In a PoW system, a 51% attack is costly but repeatable as long as enough hashing power has been collected. With PoS, the attackers run the risk of losing their stake should the attack fail. In such a case, the only way to relaunch an attack would be to acquire new Ether.”

Casper, Sharding & Ethereum 2.0

The roadmap to Ethereum 2.0 consists of two combined upgrades, which are Casper and Sharding, as is designed to bring scalability and security benefits to Ethereum. It may take several years for these both to be implemented fully and form Ethereum 2.0. Despite that Casper and Sharding will be combined to form Ethereum 2.0, both are separate projects that will have different phases and implementation and completion times. The Casper protocol is a proof of stake consensus mechanism that forms a major part of Ethereum 2.0 roadmap. With Casper, validators will have to set aside part of their Ether as a stake.

When blocks are discovered by validators which they think should be added to the Ethereum blockchain (validated), they will make a bet on it in Ether. If the block is appended to the chain then the validators are rewarded based on their bet sizes. As mentioned above it will have built-in mechanisms for punishing malicious actors on the protocol which will ensure that they cannot game the system and that the system remains trustless. Validators acting badly will have their stakes removed. Sharding, on the other hand, will divide the network into separate shards. Each shard will be designated to process specific transactions, which it can do so on its own. Currently, the entire network is needed to process each transaction, which is likely an excessive use of the network’s resources. That’s why implementing sharding could significantly increase throughput on Ethereum and enable greater scaling.

This is how Vitalik Buterin explains sharding:

“Imagine that Ethereum has been split into thousands of islands. Each island can do its own thing. Each of the islands has its own unique features, and everyone is belonging on that island, i.e., the accounts, can interact with each other AND they can freely indulge in all its features. If they want to contact other islands, they will have to use some sort of protocol.”

Conclusion

Ethereum’s contribution to the blockchain/crypto world is enormous. Ethereum has opened up new possibilities with blockchain through the introduction of smart contracts, decentralized applications, and tokenized economies. There is no doubt that Ethereum is still a work in progress. It has some issues, especially those related to scaling and the solutions needed will not just come overnight. The future of Ethereum depends on how widely adopted and powerful the network becomes as well as the creativity and talent of the developers who use the platform. Ethereum indeed appears to be heading in the right direction, gaining the attention of many large corporations and institutions. The Enterprise Ethereum Alliance currently has over 386 members that support and back Ethereum related developments. Members include heavy hitters like Intel, JPMorgan, Microsoft, BP, and even the Indian Government. No one can predict for sure what impact Ethereum will have, just like in the 1990’s no one knew how much the internet would impact the world. It’s still early days for Ethereum, but it certainly has the potential to be a revolutionary platform.

Article Produced By
Malek Mezni

A tech journalist and crypto market analyst, Malek is also a double Master's Degree holder, his most recent one being from a US Top College in Petroleum Engineering. Malek worked as an Engineer for a Major E&P and started showing interest in cryptocurrencies a year ago, impressed by the huge potential of both the concept and the technology underlying it.

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What is Sharding? This Ethereum Scaling Concept Explained

What is Sharding? This Ethereum Scaling Concept Explained

Sharding is a complex topic when applied to a decentralized network such as Ethereum – Find out more in our Complete Guide to Sharding

As the scaling debate in cryptocurrencies continues, some potential solutions have actually been in development for quite some time now.

Specifically, in the case of Ethereum, where a large focus is placed on decentralization and security at the expense of scalability, the application of sharding in conjunction with implementing Proof of Stake consensus is seen as the much needed mechanism through which the network can scale to practical levels for applications while still retaining its decentralization and security. Sharding is a complex topic, especially when applied to a decentralized, peer to peer network such as Ethereum where the global state of the network constantly is updated. So what exactly is sharding and how can it help blockchain networks to scale?

Sharding and Distributed Computing Background

Sharding is actually much older than blockchain technology and has been implemented in a variety of systems from business database optimizations to Google’s global Spanner database.

  • Essentially, sharding is a particular method for horizontally partitioning data within a database.
  • More generally, the database is broken into little pieces called “shards”, that when aggregated together form the original database.
  • In distributed blockchain networks, the network consists of a series of nodes connected in a peer to peer format, with no central authority.
  • As is the case with current blockchain systems, each node stores all states of the network and processes all of the transactions.
  • While this provides the high level security through decentralization, especially in Proof of Work systems such as Bitcoin and Ethereum, it leads to legitimate scaling problems.

Ethereum Sharding

Using Ethereum as an example, a full node in the Ethereum network stores the entire state of the blockchain, including account balances, storage, and contract code. Unfortunately, as the network increases in size at an exponential pace, the consensus only increases linearly. This limitation is due to the communication needed between the nodes needed to reach consensus. Nodes in the network do not have special privileges and every node in the network stores and processes every transaction. As a result, in a network the size of Ethereum’s, issues such as high gas costs and longer transaction confirmation times become noticeable problems when the network is strained. The network is only as fast as the individual nodes rather than the sum of its parts.

Sharding helps to alleviate these issues by providing an interesting, yet complex solution. The concept involves grouping subsets of nodes into shards which in turn process transactions specific to that shard. It allows the system to process many transactions in parallel, thus significantly increasing throughput. A simpler way to put it would to be imagining the division of the United States into states. While each state (a shard in this case) is part of the larger United States (Ethereum network), they have their own specific rules, boundaries, and subsets of populations. However, they do share a universal language and culture as part of their larger network that makes up the country.

Or even better, in Vitalik Buterin’s own words:

 “Imagine that Ethereum has been split into thousands of islands. Each island can do its own thing. Each of the islands has its own unique features and everyone belonging on that island i.e., the accounts, can interact with each other AND they can freely indulge in all its features. If they want to contact other islands, they will have to use some sort of protocol.”

As you can see, the concept of fragmenting the network into more efficient pieces allows the network to function as the sum of its parts, rather than being limited by the speed of each individual node.

How Does Sharding Work in Blockchains?

We will continue to use Ethereum as an example in this as it is the most well-known and arduous sharding attempts in the blockchain arena, as the Ethereum developers are implementing what is known as “state sharding”. The current state of the Ethereum blockchain is known as the “global state” and is what everyone can see when they look at the blockchain at a specific instance. The tricky part in implementing sharding in Ethereum is that by sharding the nodes into smaller subsets, these subsets need to be able to process specific sets of transactions while simultaneously updating the state of the network, all while ensuring it is valid.

Sharding in Ethereum is supposed to be implemented in a two phase rollout, more than likely after Proof of Stake is implemented in the network. Phase one will be the data layer consisting of the consensus of what data is in the shards. Phase two is the state layer. All of this is very fluid, so a general breakdown of how it may work is below. Ethereum breaks down the network into specific shards. Each shard is assigned a specific group of transactions that is determined by grouping specific accounts (including smart contracts) into a shard. Each transaction group has a header and a body that consist of the following.

Header

  • The shard ID of the transaction group
  • Assignment of validators through random sampling (verify the transactions in the shard)
  • State Root (state of the merkle root of the shard before and after transactions added)

Body

  • All of the transactions that belong to the transaction group that are part of the specific shard.

Transactions are specific to each shard and occur between accounts native to that shard. When transactions are verified, the state of the network changes and account balances, storage, etc are updated. In order for the transaction group to verify as valid, the pre-state root of the transaction group must match the shard root in the global state. If they match, the transaction group is validated and the global state is updated through the particular shard ID state root. Instead of only containing a state root, each block of the Ethereum blockchain now contains both a state root and the transaction group root. The transaction group root is the merkle root of all of the transaction groups from the specific shards for that block of transactions. Basically, there is a merkle root of all of the different shards that contain the updated and verified transaction groups. This root is stored in the blockchain along with the updated state root.

The employment of merkle tree concepts in this structure is vital to ensuring validity of the blockchain. Understanding how a merkle tree and specifically a merkle root work, can help you to grasp these concepts much more easily.Consensus within a shard is reached through a Proof of Stake consensus of randomly selected nodes that are applied to a shard for specific consensus round. This not only provides finality to the consensus, which is necessary within the shards, but also provides a particular defense to an attack that a Proof of Work blockchain would be susceptible to in this instance. The hash power required to overrun a specific shard in a PoW sharded network is drastically reduced and the ability for a malicious actor to take over a shard through computational power is feasible.

Through this, the bad actor could attack other shards through the communication protocol which is one of the more complicated and important features of sharding architecture. Random sampling selection of the validators within a shard manages to stifle this type of attack since a bad actor will not know which shard they are being placed in before they are actually placed in it. Further, random sampling will be used to select the validators that are actually validating from that random validating set. The communication protocol is vital to the sharding architecture functioning correctly in the system. You can think of the communication protocol as the universal language that is consistent among the states as part of the larger United States.

However, designing this protocol is highly challenging and needs to be performed so that it is only used when necessary. It becomes necessary when a specific node requires information that is not stored within its own shard and needs to find the shard with the requisite information. This communication is known as cross-shard communication. The cross-shard communication is achieved through applying the concept of transaction receipts. The receipt for a transaction is stored in a merkle root that can be easily verified but that is not part of the state root. The shard receiving a transaction from another shard checks the merkle root to ensure that the receipt has not been spent. Essentially, the receipts are stored in a shared memory that can be verified by other shards, but not altered. Therefore, through a distributed storage of receipts, shards are able to communicate with each other.

Sharding Moving Forward

Sharding in Ethereum is expected to be implemented after the Casper PoS upgrade. Recently, there have been some developments regarding Ethereum 2.0 which involve implementing both Casper and sharding. Sharding has also been implemented in a few other platforms, most notably Zilliqa. However, Zilliqa does not implement state sharding at this time and instead focuses on providing a high throughput blockchain by utilizing transaction and computational sharding.

Conclusion

Sharding serves to offer some promising solutions to the elephant in the room of blockchain platforms right now, scalability. While Bitcoin’s lightning network is in the testing phase and has been showing some very promising progress so far, Ethereum’s solution brings with it some unique challenges as it is pegged as a world computer that is Turing complete. Sharding will directly work only at the protocol level, so to the end user or dapp developer it may not be necessarily relevant to learn about. Regardless, Ethereum’s attempt at state sharding for a vast, decentralized network is an impressive endeavor and will be an enormous feat of accomplishment if successfully implemented.

Article Produced By
Brian Curran

Blockchain writer, web developer, and content creator. An avid supporter of the decentralized Internet and the future development of cryptocurrency platforms.

https://blockonomi.com/sharding/

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Ethereum’s Vitalik Buterin Makes 2020s Cryptographic Prediction

Ethereum’s Vitalik Buterin Makes 2020s Cryptographic Prediction

Ethereum co-founder, Vitalik Buterin has made some cryptographic predictions for the 2020s.

Vitalik in a post on his Twitter handle reminisced on the megatrend in the 2010s, saying the megatrend in cryptography of that period was characterized by elliptic curves, pairings, and general-purpose ZKPs/SNARKs. Predicting what will happen in the 2020s, the respected programmer said the megatrend of this period will be lattices, LWE, multilinear maps, homomorphic encryption, MPC, and obfuscation. These predictions, he said will be added to the adoption of the 2010s cryptographic megatrend. Vitalik said what is peculiar to the two periods is the increased usage of cryptographic primitives which operate over arithmetic and Boolean circuits as a mathematical representation of computation. Noting that the cryptographic constructions will be a general-purpose this period, Vitalik when asked how Chainlink fits into the megatrend said with obfuscation, there is a chance to authenticate HTTPS responses ie. data from websites without necessarily using trusted hardware.

Decentralized Court, Ethereum co-Founder Weighs In

Earlier, the founder of Ethereum had spoken about a paper on blockchain smart contracts for arbitration, published by both Hitoshi Matsushima and Shunya Noda. The published paper opens the world to great ideas on settling legal issues without the deployment of a legal procedure. The paper implements blockchain technology ideas of saving loads of information without giving rooms to manipulation. Professor Hitoshi Matsushima is from the Department of Economics, University of Tokyo, while Professor Shunya Noda is from the Vancouver School of Economics, a section of the University of British Columbia, Canada.

The paper digs dip on smart contracts, removing the central administration while opening a room for its usage in the legal field. At the time of writing, the idea has not been implemented whatsoever. The paper makes it clear that a self-enforcing mechanism that does not depend on a trusted third party or a long-term relationship is possible using blockchain technology. Arguably the innovation is a digital court written on the blockchain technology. The digital court is capable of punishing agents that default on the basic agreement. The applicability of Ethereum smart contracting makes the network good for the digital court. And hopefully, Vitalik is thinking of delving into this idea.

Article Produced By
Olayode Yusuff

https://newslogical.com/ethereums-vitalik-buterin-makes-2020s-cryptographic-prediction/

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Ether Price Drop Slashed Valuation of Crypto Valley’s Top 50 Firms by 40%

Ether Price Drop Slashed Valuation of Crypto Valley’s Top 50 Firms by 40%

The combined valuation of the top 50 blockchain-related firms in the Swiss canton of Zug

— known as “Crypto Valley” within the industry — fell by nearly half in 2019. Swiss investment firm CV VC debuted a new report at the World Economic Forum in Davos, Switzerland on Jan. 22, giving an appraisal of the blockchain and cryptocurrency industries in the Crypto Valley during the last year. Per the report, the valuation and subsequent price drop in Ether (ETH), the native cryptocurrency of the Ethereum network, led to a 40% drop in valuation of the top 50 firms — from $42.6 billion in H1 2019 to $25.3 billion in H2 2019.

But Ether price isn’t everything

CV VC director Ralf Kubli told a Cointelegraph correspondent at the World Economic Forum that, while all crypto related firms are ultimately influenced by token prices, it is important to

examine funding inflows and employment:

“Overall funding has increased, so the real money that flows into the projects that we count in the top 50 has increased, so that’s basically a really important indicator for us that it continues to grow. And since […] employment has increased among the top 50 — employment has increased overall in the space in Switzerland — so that’s kind of how we gauge…” 

Indeed, the report notes that funding to the top 50 projects increased from $3.8 billion in H1 2019 to $4 billion in H2 2019. The top selected projects also employ 733 of over 4,400 crypto and blockchain professionals currently working in Switzerland and Liechtenstein. 

Last year saw new additions to the top 50

As Kubli further noted, the top 50 companies change every year depending on their annual performance. 2019, for its part, saw the addition of several noteworthy projects to the list, including Libra — the global stablecoin project first proposed by Facebook — cryptocurrency exchange Bittrex Global and Ethereum development firm CasperLabs. The report also noted several unicorns — startups valued at over $1 billion —  including Bitmain, PolkaDot and DFinity  Overall, the report states that indicators are pointing to a maturation of cryptocurrency and blockchain industries, with 842 related firms now operating in Switzerland.

Article Produced By
Aaron Wood

Aaron Wood is an editor at Cointelegraph, with a background in energy and economics. He keeps an eye on Blockchain's applications in building smarter and more equitable energy access globally.

https://cointelegraph.com/news/ether-price-drop-slashed-valuation-of-crypto-valleys-top-50-firms-by-40

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