In addition to BTC, ETH is one of the extremely potential coins in the cryptocurrency market. So is Ethereum special that can be compared to BTC? Should you invest in ETH or not? In this article, VakaFx will give you all the information about Ethereum.
1. What is Ethereum (ETH)?
Ethereum is an open software platform based on blockchain, through the use of Smart Contract functionality.
Vitalik Buterin, Gavin Wood
Ethereum can perform peer-to-peer transactions and contracts through a cryptocurrency unit of Ether (ETH). Not only that, but they are also considered a useful application platform that allows them to create their decentralized financial ecosystem.
Ethereum was introduced in late 2013 by Vitalik Buterin with the desire to create a coin to overcome the cons of Bitcoin.
According to the initial development roadmap, Ethereum will go through four important stages, including:
As of December 2019, Ethereum has completed 3 phases and is about to enter the fourth phase.
However, there was an important change during this fourth period when it was renamed to Ethereum 2.0.
2. What is Ethereum 2.0?
Ethereum 2.0 is also known as Serenity. This is a common name for some major Ethereum updates. This update will address three problems of bitcoin like security, network scalability, and decentralization.
Four key factors to solve that issue are Beacon Chain, Proof of Stake (PoS), Sharding, eWASM.
- Beacon Chain
Beacon chain is the core of Ethereum 2.0. This chain will run in parallel and cross-link between Man chain and Shard Chain.
- Proof of Stake (PoS)
PoS is a consensus mechanism that will replace the current POW mechanism. The replace will adopt a hybrid consensus mechanism between PoS and PoW - Casper Friendly Finality Gadget (FFG).
This technology will help the value and system of Ethereum will no longer be highly dependent on miners.
Sharding is a method of scaling up on-chain transaction throughput. The method is implemented by splitting large databases into small databases. These small data are called ‘shards’.
Ethereum-flavored WebAssembly (eWASM) is a subset of WebAssembly (Wasm) used for futures. Each shard will include 1 eWASM equivalent to the Ethereum Virtual Machine.
3. How many stages are there to complete ETH 2.0?
To complete ETH 2.0, we need to go through 3 stages, including:
- Phase 0
The first phase is the launch of Beacon Chain that will deploy PoS on the chain. In this stage, developers will also launch a type of asset on the Beacon chain.
This type of property is called Beacon ether (BETH). BETH is considered a genuine reward to pay to people who stake BETH.
This stage has not supported sharding, smart contracts, and property transfers yet. So you will not be able to withdraw BETH until sharding can be executed in phase 2.
- Phase 1
The next phase will shift focus on Shard Chain. Sharding will shred status information into ‘shards’ to achieve scalability and improve network speed.
- Phase 2
Phase 2 is considered the final phase of Serenity when it completes the base class upgrade. This phase is expected to take place in 2021.
During this phase, the shard chain will transition to a chain state that supports smart contracts and asset transfers.
4. Competitors of the project
Ethereum was once considered Bitcoin 2.0 but success was limited to the smart contract platform. Although it still leads to smart contract platforms in terms of market capitalization, the influence is not much.
Several projects have been developed to improve the existing issues of ETH such as:
- Eos (EOS)
- Ellar Stellar (XLM)
- Cardano (ADA)
- NEO (NEO)
- Tron (TRX)
5. The application built on Etherreum
There are many different types of applications that can be built on Ethereum. Some prominent applications include:
- Decentralized finance (Defi)
- Decentralized exchange (DEX)
- Decentralized applications (Dapps)
Here are a few reviews on these apps:
Defi and Ethereum
In the current financial system, all transactions are controlled by third parties. However, the Defi application can solve this problem. Ethereum-based financial services allow peer-to-peer connections and independent of third parties.
Ethereum is currently the platform with the most active defi applications. Some prominent Defi applications:
- Stablecoins: Stable coins are cryptocurrencies designed to minimize the impact of price volatility.
- Coinbase Wallet: is the Multi-currency wallet. Coinbase Wallet also provides access to Web-level Applications (dApps) provided by Ethereum smart contracts.
- Huobi Wallet: is the Multi-currency wallet. Houbi wallet supports dApps and staking
- MyEtherWallet: Free and open source for creating Ethereum wallets and interacting with dApps.
- Trust Wallet: A versatile crypto wallet to store BEP2, ERC20, and ERC721 tokens.
Decentralized exchange (DEX) and Ethereum
The most popular decentralized exchange is P2P. There is a very popular peer-to-peer trading platform today, P2P binance.
Decentralized applications (Dapps)
Decentralized application along with peer-to-peer networks, this is where users interact with smart contracts. Applications built on Ethereum (dapps) can do things that normal applications cannot:
- Create new cryptocurrencies and assets.
- Unblocked and uncontrolled web applications.
- Build decentralized organizations and virtual assets/world
6. The applications on Ethereum you may be using
Here is a list of Ethereum dapps you are using right now. Most are available for free download through the App Store or Google Play. You can download it directly through their websites in the form of demos, betas, or full releases.
Browser, wallet, and extension
- MetaMask: A browser plug-in application that allows connecting your device to the Ethereum network.
- Status: Ethereum mobile browser with token wallet, chat, and dApp portal.
- Brave: A mobile and web browser integrated with BAT and ERC-20 tokens.
- Opera: Dapp browser integrated with Ethereum wallet
- Ethereum Name Service: A utility to create personalized ETH wallet addresses
- Civic: Identity security and data management on the blockchain.
- Alethio: Ethereum network analysis platform.
Ethereum's application also spans many other areas such as Platform, market, Social networks, games, ...
- IDEX: A decentralized exchange with real-time trading and a high volume of transactions.
- ForkDelta: A decentralized token exchange.
7. Review the decentralized Ethereum platform
- Third parties cannot modify data
- Applications based on a network are formed through a consensus principle, making censorship impossible.
- The application is well protected against attacks and phishing activities.
- The application never stops working and can never be shut down.
Despite the many benefits of decentralized applications, Ethereum still has the following problems:
Smart contracts are written by people, so it's almost only good for the people who write them. Code errors or monitoring may lead to unintended detrimental actions. If an error is detected, the exploit can be stopped and must be rewritten. This goes against the nature of blockchain which is immutable.
8. The value of Ethereum
Mining sources of miners decide the value of ETH. Because this is a relatively young platform, often fluctuating in price, many people think that they are of little value and should not be invested.
But if you are the one who closely follows ETH, then you will realize it offers many opportunities for investors
Ethereum is an open market that allows users to easily buy, sell, or trade-in cash or Bitcoin through exchanges or between groups, organizations, and individuals.
9. Why does Ethereum not have the maximum supply?
Unlike Bitcoin, ETH has absolutely no fixed supply. Why is that? Does this affect the price of ETH? In the future, will ETH's supply be limited?
According to the development team, Ethereum will not have a limited supply. Because the team doesn't trust the same development path as Bitcoin.
For Bitcoin (built on the Proof Of Work algorithm), for the network to be safe, miners need to work to create blocks. In return, miners will be rewarded with BTC and transaction fees for successful mining. However, the reward budget is not permanent since Bitcoin's total supply is only 21 million BTC.
When 21 million BTC were mined, the reward for them was only a transaction fee. At that time, there was no guarantee that miners would continue to work to protect the network.
That's why Vitalik Buterin realized that building ETH on the Proof Of Work algorithm and having a limited supply is not a smart step.
10. How to get Ethereum?
To mine ETH, you must solve all online problems. On average, one or a group of people will solve this problem every 10 minutes and get the corresponding ETH.
However, the problem of investing funds for excavators and electricity is something to consider carefully if you want to become a miner. And this method also takes a lot of time and effort.
- Investment in ETH
You can make money by investing ETH. Buy ETH at a price you feel is reasonable and keep it until you reach your desired price.
The ETH price is often fluctuating and there are times when the difference is up to several tens/hundreds of USD in a short time.
So many people rely on this point, spending time researching, choosing the right time to buy ETH at a low price and then sell it at a high price.
11. Should we invest in Ethereum?
If you know the right time to invest, the profit potential is very high. A few factors that should make you consider investing in ETH include:
- More and more countries are accepting Ethereum as a valid form of payment, even more so than Bitcoin.
- Most countries do not accept Bitcoin because their management and privacy are not completely secure.
- Ethereum's market is growing. ETH's market capitalization is 25 million USD in 2014 and currently is over 15.5 billion USD.
For a fast-growing market like Ethereum, investing in ETH seems like a very profitable opportunity.
12. Which best exchange to buy/sell and trade ETH?
Ethereum is a very popular cryptocurrency, so most popular exchanges offer it. You can choose to trade ETH at reputable exchanges such as Binance, Okex, Houbi, Bitfinex, ...
13. Which Ethereum wallet is safe?
Before buying Ethereum, all you need to do is to create a wallet address to store your Ethereum. You can choose to store ETH at hot or cold storage
Hot wallets are web wallet platforms. Some of the most popular and used wallets are Blockchain.com or CoinBase.
Cold storages are software wallets or USB wallets (shaped like a USB), such as Ledger Nano S, ledger nano X, or Trezor.
However, one thing to note is that cold storages are always safer than hot wallets.
We hope this article will bring you some useful insights. If you have any questions, comment below.
Follow our official channels for up-to-date information about Blockchain and cryptocurrency.
- Website: https://vakafx.com
- Email: [email protected]
- Telegram: @vakaxasupport