What is Ethereum (ETH)?

Ethereum is one of the most important blockchain in the world of cryptocurrencies and responsible for many of the revolutionary technologies that seek to transform the world as we know it.

What is Ethereum?

LA cryptocurrency Ethereum, is one of the largest cryptocurrency project in the cryptocurrency industry. Ethereum itself is a digital platform that is based on technology blockchain or blockchain. Its goal is to become a blockchain capable of running decentralized applications.

To achieve this, this project has a blockchain and a cryptocurrency with unique characteristics. Among them the ability to use and create smart contracts and new tokens. Both are powerful functionalities, which allow it to establish itself as one of the most complete and powerful blockchain in the crypto world.

The network currency is called Ether (ETH), and like Bitcoin (BTC), Ether is characterized by being a cryptocurrency that can be used as a method of payment between peers. Another similarity with Bitcoin and other cryptocurrencies is that it is not controlled by any government or regulatory body. Its development is marked by Ethereum Foundation, its Core Team and the community that supports and supports it. Another important point is that it uses the Proof-of-Work (PoW) consensus protocol, using the Ethash algorithm. Although this may change in the short term with the release of Ethereum 2.0 and the jump to being a cryptocurrency using the Proof of Stake (PoS) protocol.

The development of this blockchain began thanks to the work of Vitalik Buterin 2013 the year.

Ethereum technical characteristics

Mining

Ethereum is a cryptocurrency that works thanks to the consensus protocol PoW using the algorithm Ethash. This algorithm is designed to be highly demanding and targeted at GPU mining. For this reason, mining was initially highly decentralized and diverse.

Ethash uses the Keccak hash function, also known as SHA-3. In this way, the algorithm seeks to use highly secure cryptographic elements. At the same time, Ethash is planning to have intensive memory and cache usage. Both features are aimed at offering resistance to mining by ASIC and avoid centralizing it.

Cryptocurrency issuance

This cryptocurrency currently has an annual issue limited to 18 million Ethers per year. In other words, each year the mining activity can generate a maximum of 18 million new coins. However, the total emission is infinite. To achieve the emission, the network has a coinbase transactions quite peculiar. Firstly, if a miner finds the solution to a block, he receives a reward of 2 ETH. But if another miner also finds a solution to that block at that time, that miner also receives a reward. In this way, the coins are issued on the Ethereum blockchain.

The initial issue of Ether on the blockchain was related to the pre-sale that was made to drive the project. Back then, a total of 60 million Ethers were created. Of these, 12 million were used to create a development fund, this is the beginning of the well-known Ethereum Foundation.

However, Ethereum is a constantly evolving blockchain. One of the important changes that will be seen in Ethereum in the coming years will be the abandonment of PoW to move to a mining system PoS. With this change, Ethereum will go on to create cryptocurrencies for its blockchain in a completely different way from the current one, avoiding using miners and encouraging greater economic participation in the blockchain.

Gas, the basis of everything

Gas is a concept very typical of the Ethereum network. This is used to measure the work done within the blockchain. Each action on the blockchain as an operation or a set of operations has a specific cost that is given in Gas units.

Among the functions of Gas within the blockchain we can mention:

1. Assign a cost to the execution of tasks. Gas is used as a unit to measure the cost of performing a certain action within the blockchain. Each action has a cost in Gas and a set of actions carried out adds the total cost of said operation. In this way, we can see Gas as the price to pay for performing actions within the blockchain.
2. It helps improve system security. As each action has a price, this helps prevent the blockchain from stopping its operation and undermining its security. This is possible because Gas helps protect the network from spam attacks. For this, gas involves an expense that prevents them from being DDoS attacks easily over the network, attacks that can leave millions of users without service.
3. Reward the miners. The actions on the blockchain depend on its execution on the hardware that is in the hands of the miners. To pay for this use there is Gas.

Block generation time and size

Ethereum is characterized by calculating the size of its blocks in a somewhat particular way. Unlike Bitcoin, where its size is limited to 1MB, on Ethereum its size is limited to a specific amount of Gas. To be more precise, the Ethereum block size limit is 12.500.000 Gas (as of February 2021). This means that each block can contain a total of operations as long as it does not exceed the specified Gas limit.

Generally, a block can contain about 500 payment operations between accounts, the simplest of possible operations. In the case of a smart contract, the operations of one of them can easily reach the Gas limit of each block.

Another difference from Bitcoin is the block generation time. In Bitcoin, each block is generated every 10 minutes, while in Ethereum this value is variable. In principle, each block was generated approximately every 16 seconds. This value increased to 30 seconds in 2017, and currently stands at 14 seconds on average. This means that it is generally faster in providing confirmations than Bitcoin, which has a positive impact on its possibilities as a payment system.

Smart Contracts

Un Smart contract or smart contract is a computer program that executes certain actions pre-established in its code under certain conditions. Actions that have been reviewed and accepted by the different parties that have "signed" said contract. In this way, the smart contract enforces its programmed conditions by presenting a response according to its clauses in a completely autonomous way.

Smart contract technology is one of the fundamental foundations of Ethereum and the operation of many of its features. A situation that can be seen especially in the tokens and DApps of this blockchain.

Ethereum Virtual Machine

La Ethereum Virtual Machine (EVM), is a software whose objective is to serve as abstraction layer in the execution of code that is stored in the blockchain. With this, it seeks to prevent a malicious DApp or smart contract programmer from threatening the security of the nodes from the network and with the network itself.

To achieve this, EVM performs a complete abstraction of the system managing access to the resources of computers and limiting their actions in a controlled environment or virtual machine. But in addition to this, EVM also seeks to simplify the development and updating of applications and features available for DApps. In other words, EVM was created both to protect and to allow expanding Ethereum functions in a simple way.

EVM allows the operation of smart contracts and DApps thanks to the use of the programming language Solidity. This language allows you to program all the logic behind DApps and smart contracts while allowing decentralized execution of your code using EVM.

Uses of Ethereum

Ethereum is one of the cryptocurrencies and blockchain with the greatest variety of uses that exist today, among them we can highlight:

Accept and receive payments quickly and safely

One of the great features since its inception has been its ability to handle payment much faster than Bitcoin. This is due to the short block production period ranging from 10 to 30 seconds and the scalability of the blockchain.

ICO realization

While creating tokens and ICOs was not started by Ethereum, but by calls colored coinsThe truth is that this project offered tools to greatly facilitate this work. With the creation of ERC-20 token, Ethereum went on to become the "Father of ICOs" and with reasons for it. With the creation of ERC-20, creating a token was no longer a highly complex task.

Nowadays, it is enough to carry out a smart contract following the model of the ERC-20 token and you had the job done. This gave a significant boost to the blockchain and allowed the diversification of the cryptocurrency market opening up new possibilities.

In fact, there are currently at least 191.000 ERC-20 tokens created, each with unique characteristics running on its blockchain.

Smarts contracts and DApps

Smart contracts and DApps They are one of the biggest uses Ethereum has. The capabilities of these two tools are practically endless. Since the creation of a smart contract to buy or sell or negotiate goods or services, its usefulness is only limited by the imagination. On the other hand, DApps are a revolution. They are capable of creating completely decentralized, uncensored, secure and economically self-sustaining applications. We can also mention the platforms of oracles that are built on this network, as in the case of Augur.

Companies using Ethereum

Ethereum's capabilities to use smart contracts, easily build tokens and deploy DApps has captured the attention of many companies worldwide. This has meant that the development of Ethereum has had the direct or indirect support of a large business group interested in developing its technology. All this set of companies have created the call Ethereum Enterprise Alliance (EEA) which has more than 100 members. They stand out among them

• Accenture, a company dedicated to technology services and consulting.
• AMD, a leading company in the development of chipset, CPU and graphics cards.
• BBVA, a Spanish bank with a worldwide presence.
• Banco Santander, another Spanish bank with a worldwide presence.
• BP Ventures, the investment arm of oil company BP.
• Cisco, the world's largest networking company.
• Delloite, one of the largest audit, financial consulting and legal services companies in the world.
• GoChain, one of the most important companies in the development of DApps.
• Hyperledger, the world's largest enterprise and open source blockchain development project.
• JP Morgan, one of the largest financial firms in the world.
• Microsoft, the world's largest software development and technology company and responsible for Windows development.
• VMWare, the most important company in the development of virtual machines and integration solutions for virtual environments.

Ethereum Advantages

1. It is a multipurpose blockchain thanks to its ability to integrate and use smart contacts.
2. The use and development of EVM confers a high level of security to execute smart contracts and DApps in a completely decentralized and secure way.
3. It has a fast production of blocks, which allows it to have a much faster transaction confirmation speed than Bitcoin and other cryptocurrencies.
4. Development is not controlled by any central authority, its Development Core is completely decentralized and decisions are made by consensus. In addition, the community has a high impact on decisions about the development of the blockchain.

Links of interest