The Cryptocurrency Informer
Ethereum's 5th Birthday!
This week: Today’s episode will be slightly different than usual…in honor of Ethereum’s 5th birthday, today’s episode will be a mini-primer for the Ethereum blockchain.
July 31st, 2020: Ethereum's 5th Birthday!
Today’s episode will cover events happening the week ending July 31st, 2020. Ethereum celebrates it’s 5-year anniversary this week – to celebrate, today’s episode will provide a brief summary of the wildly popular and adaptable blockchain technology.
Let’s start with some basic information:
Ethereum is a blockchain that launched in 2015.
The Ethereum blockchain’s native cryptocurrency is called Ether (“ETH”).
The Ethereum Blockchain is decentralized (not controlled by any one person, organization, or government) and programmable (ability to create different types of applications).
These two core tenants of the technology enable Ethereum developers to create Decentralized Applications (“dApps”).
One primary feature of the Ethereum blockchain, which enables the aforementioned dApps, are its smart contracts – these are computer programs (or code) that are deployed on the blockchain. They are immutable (can’t be changed) and deterministic (the same pre-determined outcome occurs for anyone that executes the contract). These contracts have a unique address, can store/send/receive funds, and can interact with other addresses and other smart contracts.
All of these properties enable smart contracts to execute tasks and commands, which developers utilize to create a variety of different applications, including cryptocurrencies.
The Ethereum blockchain works within a system known as the Ethereum Virtual Machine (“EVM”). Transactions on the Ethereum blockchain require Gas to occur. Essentially, gas is a unit of measurement representing the computing energy that is required to perform the task that the transaction calls for. More complex tasks require more gas, but the cost to operate a given task is constant. The value of gas is measured in ETH – and while the cost of a task is constant, the value that a unit of gas represents can change based on the market.
The Ethereum blockchain currently operates using Proof of Work – a consensus mechanism that validates blocks in the blockchain. For any block to be validated, complex mathematical problems involving cryptographic hash and hash functions, must be solved by miners. The first miner to solve this equation receives the block reward (transactions fees from the block + a pre-determined amount of ETH), which is meant to compensate for the energy that was required. Once solved, it can be easily verified by anyone.
Proof of work requires an insanely high level of computational power, which some see as a double-edged sword. It’s very reliable in proving validity, but the level of computational power required means that it’s difficult for most people to take part in.
That’s where ETH2 comes in – ETH2 is a blockchain upgrade meant to solve some of the issues that the Ethereum blockchain has, and to better enhance it as well. Namely – performance, scalability, and accessibility are all going to be addressed in the ETH2 blockchain. The update itself is going to be a lengthy, three-phase, multi-year process. Although the first phase, phase 0, has yet to begin, Ethereum developers released the ETH2 validator launchpad (testnet version) earlier this week.
We’ll certainly be creating future episodes covering the development of ETH2. Be sure to stay tuned!
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