Furthermore, the system also provides its users with the Ethereum Virtual Machine (EVM), which essentially serves as a runtime environment for Ethereum-based smart contracts. It gives users the security of running untrusted code while ensuring that programs do not interfere with each other. The EVM is wholly isolated from the Ethereum mainnet, making it a perfect tool for testing and improving intelligent contracts.
The platform also provides a cryptocurrency token called “Ether.”
In late 2013, Vitalik Buterin described the idea to him in a white paper, which he sent to some of his friends, who in turn sent it further. As a result, about 30 people contacted Vitalik to discuss the concept. He was expecting criticism and people pointing out critical mistakes in the concept, but it never happened.
The project was publicly announced in January 2014, with the core team consisting of Vitalik Buterin, Mihai Alise, Anthony Di Iorio, Charles Hoskinson, Joe Lubin and Gavin Wood. Buterin also introduced Ethereum on the stage of a Bitcoin conference in Miami, and a few months later, the team decided to wholesale Ether, the network’s native token, to fund development.
Is it a cryptocurrency?
By definition, Ethereum is a software platform that aims to act as a decentralized internet and a decentralized app store. A system like this needs a coin to pay for the computational resources required to run an application or a program. This is where “Ether” comes in.
Ether is a digital bearer asset and does not require a third party to process the payment. However, it works as a digital currency, but it also acts as “fuel” for decentralized applications within the network. If a user wants to change something in one of the Ethereum applications, he must pay a transaction fee so that the network can process the change.
Transaction fees are automatically calculated based on the amount of “gas” that action requires. The amount of fuel required is calculated based on the required computing power and operating time.
Is Ethereum Like Bitcoin?
Ethereum and Bitcoin may be somewhat similar in the cryptocurrency aspect, but the reality is that they are two completely different projects with entirely different goals. While Bitcoin has established itself as a relatively stable and most successful cryptocurrency, Ethereum is a multipurpose platform. Its Ether digital currency is only one component of its innovative contract applications.
Even when the cryptocurrency aspect is compared, the two projects appear to be very different. For example, Bitcoin has a capacity of 21 million Bitcoins that can be created, while the potential supply of Ether can be practically infinite. Also, the average Bitcoin block mining time is 10 minutes, while Ethereum‘s target does not exceed 12 seconds, which means faster confirmations.
Another big difference is that successful Bitcoin mining today requires vast amounts of computing power and electricity and is only possible if mining is used on an industrial scale. On the other hand, Ethereum’s proof-of-work algorithm encourages decentralized mining by individuals.
Perhaps the most crucial difference between the two projects is that Ethereum’s internal code is complete Turing, which means that everything can be calculated as long as there is enough computing power and time to do it. Bitcoin does not have this ability. While a complete Touring code provides Ethereum users with virtually limitless possibilities, its complexity also means potential security complications.
Following the 51% attack and subsequent fork of ETC, the real security problems have occurred at the level of Smart Contracts, the computer programs that run on the Blockchain and allow the programming and automation of processes. The so-called “bugs” are security flaws that allow them to be discovered and exploited by hackers thanks to their open-source nature. It is not a problem at the network level but the contracts that go over it or the economic models they incorporate.
How is the process of liquidation of others?
With the entry into force of EIP1559, an improvement system for the Ethereum network, it is wanted to install the burning of tokens under the “base rate”. The current problem of the network goes through high commissions resulting from the system that, in the case of low amounts, make the operation impossible. With this token burning system, the system is changed so that, instead of making operations more expensive (more accentuated when there is high demand), the ETH in circulation is reduced, and, consequently, the miners receive less.
Do dApps offer greater security than intelligent contracts?
A dApp has its programming code running on a decentralized network compared to an App on a centralized one. A Smart Contract is a code that lives on the Ethereum network and works as programmed. Once it is on the network, it cannot be changed. dApps can be decentralized as they are controlled by the logic programmed in the contract and not by a third party.
