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Category: Ethereum

Ethereum is smart contract platform- it allows for the deployment of decentralized applications (Dapps). Dapps are programs that obey a certain set of conditions that cannot be altered once published – not even by the creator of the contract.
Programmable money can replace the use of third-party escrow or brokers by programming conditions directly into the transaction.

  • Ethereum (ETH): What is it? The complete beginners guide

    Ethereum (ETH): What is it? The complete beginners guide

    What is Ethereum?

    Ethereum has been described as a revolutionary breakthrough- with claims that it may one day change how banking, gaming and even social media is operated. Since it was proposed in late 2013, Ethereum grew from an idea proposed by 21 year old college dropout to a platform that is now worth $20 Billion USD market capital. What is all this hype about – is Ethereum truly a groundbreaking network potentially worth trillions of dollars? In this article we’ll discuss the basics of Ethereum in plain English, along with examples of what makes Ethereum different from other networks.

    To explain Ethereum, we must first understand that most of the world operates in a centralized manner. For example, iPhones are mad by Apple, and Apple has complete control over what can and cannot go on the phone. Facebook is a social media platform, and the corporation can make decisions on who gets accounts Facebook accounts, what content gets shared and more important, who gets money (ie Facebook). Taking this example even further, we realize that the Banking world is also the same – central banks have the power to make critical decisions and benefit from the traditional centralized banking infrastructure.

    Ethereum offers an alternative to this – instead of trusting a central party such as Apple, Facebook or JP Morgan Chase, we can trust in each other. Instead of centralization, Ethereum offers a solution where we can go in a completely new direction – towards decentralization.

    What is Decentralization

    The concept of trusting each other was previously impossible without the advent of a few cryptographic technologies. After all, you wouldn’t go on the street and randomly trust a stranger with $1000. Nor would you want to trust a stranger with your social media information, or running your iPhone.

    Ethereum Network

    Once a program is deployed to the Ethereum network, computers also known as nodes will ensure it is executed exactly the way it is intended. Ethereum refers to the the infrastructure for running smart contracts, dApps, and tokens worldwide. It is commonly mistaken for the currency, Ether, which is the native currency on the Ethereum network. To perform actions such making a transaction on Ethereum, Ether (ETH) is needed.

    Decentralized Platform

    Ethereum is a decentralized smart contract platform the runs decantralized applications (Dapps) and decentralized finance (DeFi). The vision behind Ethereum was to improve upon Bitcoin by allowing for the execution of a full range of code – via the turing-complete programming language Solidity. Ethereum is currently used to create tokens, such as Basic Attention Token ($BAT), creating digital collectible items (ERC 1155) and decentralized finance (MakerDAO). On the Ethereum network, the currency Ether (ETH) is used as a form of value transfer and to purchase “gas” required to power smart contracts.

    Ethereum is an open-source platform for building and deploying decentralised applications i.e. dApps. Its native currency, Ether (ETH) serves as “gas” for running computations and transactions for dApps.

    Main features of Ethereum

    Ethereum 2
    Ethereum 2
    • Decentralised: No one party has majority control over the Ethereum network’s computing power.
    • Ether is a cryptocurrency: It can be used as “gas” to power dApps and is a store of value.
    • Automatic: Processes on the network can be executed without human intervention.
    • Public: It is accessible by anyone with a computer and internet connection.

    What are dApps?

    Users can build and run decentralised applications (dApps) on the network. They serve some particular purpose to its users and must have these common features:

    1. Open source: The dApp’s source code must be publicly available. Changes to the source code require agreement by a majority of users.
    2. Decentralized: Records of how the dApp were used are stored on a public blockchain. This blockchain is not subject to any controlling entity.
    3. Incentivized: dApps must use and provide its unique tokens or digital assets to users as a reward for their contribution.
    4. Protocol: The community of users must agree on a cryptographic algorithm to show proof of value. Ethereum is currently using Proof of Work as its distributed consensus system. In future, this will change to Proof of Stake (PoS). Learn more about Proof of Stake.

    Examples of dApps include:

    • Enjin: a suite of products for creating, storing trading and integrating blockchain-based in-game assets. Learn more about Enjin here.
    • Bancor: a token exchange.

    Future of Ethereum

    Ethereum’s latest upgrade, “Constantinople” was launched on 28th February 2019.

    The next upgrade “Istanbul” is tentatively scheduled for 16th October 2019. It will have several updates. These include a new Proof of Work Algorithm designed to close the efficiency gap available to specialised ASIC miners.

    Click here for a list of the upgrades under the Istanbul upgrade.

    The ecosystem will gear up towards “Ethereum 2.0”- known as “Serenity”. Its major update will be a shift from Proof of Work to Proof of Stake.

    Learn about how Ethereum’s shift to Proof of Stake and how this will affect users.

  • Proof of Stake explained

    Proof of Stake explained

    Proof of stake (PoS) is a consensus mechanism introduced in 2011 to improve upon the current most popular algorithm in use – Proof of Work (PoW). The main advantage of Proof of Stake two-fold it improves the speed of the Blockchain and also reduces the amount of electrical waste. Instead of consuming vasts amounts of computational power to “mine” for cryptocurrencies, Proof of Stake elects stakeholders to validate transactions. This election processes depends on the amount of cryptocurrency held by a node, hence the name Proof of Stake.

    What is Proof of Stake

    To truly understand PoS it is easier if we also explain the current system being used by Ethereum, and that is proof of work (Ethereum Mining). So basically when Ethereum is transferred, miners group that up into a ledger called a block chain and to do this they have to solve a puzzle. In creating this blockchain, a lot of computational power is also used. The amount of reward you get for creating a blockchain is a transaction reward. However, this depends on how much work you ie. how fast you can calculate and solve the puzzle.

    So this is all going to go away once proof of stake comes along. With proof of stake, you don’t actually solve any puzzles. You remove the puzzle solving element from the system and thus change the way the reward is distributed. So instead of proving how fast you can calculate with hashrate, you need to prove how much Ethereum you own. You do this with something called a master node. When you create a master node, you have to lock up a certain amount of Ethereum to prove that you have it and rewards are distributed according to how much proof of stake you have. One can create multiple master nodes with a lot of Ethereum inside and you’ll earn more through this method.

    Will Ethereum adopt Proof of Stake?

    So you might have heard that Ethereum is considering changing its distributed consensus system to something called proof of stake. Here, we will try to explain what this is as well as how it may affect you.

    So you might have heard that Ethereum is considering changing its distributed consensus system to something called proof of stake. Here, we will try to explain what this is as well as how it may affect you.

    How does this affect me?

    So that’s going to be extremely interesting for everyone. We’ve seen proof of stake currencies before. Dash is one example where 50% of the rewards is done by mining and the other 50% is done by proof of stake. And there is PIVX which is 100% proof of stake. The advantage of proof of stake is huge. One benefit is that you no longer have to do the calculations which mean you save a lot of computational power. Another one is that you actually lock up Ethereum. By locking up Ethereum you effectively create more scarcity which means the price should go up.

    So hopefully, it’s going to happen sometime this year. To do so, the people in charge of Ethereum have to make sure the code is ready and stable. And they also have to make sure they have the support of the miners. That’s going to be an interesting thing to see in the coming months because if the miners don’t support this move then what can happen is that it might break up Ethereum again just like last year.

    But there are mechanisms to help along this process. Ethereum actually has kind of a ‘time bomb’ that would blow up if the switch is not made. The switch has always been planned and it’s in a sense been hard coded to happen sometime so that’s kind of interesting to see how this will progress.

    Miners also do not need to worry they will be without a job. There are other currencies that can be mined with the current hardware. For example, if you use AMD GPUs, you can start mining Zcash which is also extremely profitable right now. So I do see this as being very exciting for everyone.