Technology-based solutions are now characterized by multi-layered and interconnected networks with large numbers of participants, which can create significant challenges in information sharing and coordination. Ethereum is the newest craze in the cryptocurrency world, and you can buy it using the Ethereum Code trading site. Moreover, there is a growing global appetite for automating processes that rely on cumbersome manual tasks and manual regulatory systems.
Ethereum was intended to be one such solution, providing an open platform allowing the automation of any digital agreement. From autonomous online markets to international trade agreements, Ethereum has been designed as a decentralized framework powered by blockchain technology.
What is Ethereum?
The Ethereum platform allows anyone to build a custom application with fungible digital tokens at minimal financial investment. Ethereum’s initial token offering (ICO) in 2014 was a success. The same year, Ethereum launched “The DAO,” a decentralized autonomous organization (DAO) that raised almost $150 million through a token sale.
The DAO was intended to offer smart contract functionality to any organization, hoping this would spur further development of the Ethereum ecosystem and allow for financial innovation on these digital platforms. Unfortunately, The DAO quickly fell victim to hackers, and an unknown attacker drained $50 million from the fund in May 2016. While Ethereum’s development lags behind that of Bitcoin, it is revolutionizing specific industries by taking the automation of traditional business relationships and processes into an entirely new realm.
In this post, we will review the basic functionalities of Ethereum and provide a general guide to its functionality. We will also review some common problems a user might encounter when entering this emerging ecosystem.
Functionalities of Ethereum:
Ethereum, the second-largest cryptocurrency by market capitalization, is an innovative contract platform. Contrary to its name, Ethereum is not a “coin” but a global payment system. The platform has two tokens: ether (ETH) and ether classic (ETC). Ether supports the development of intelligent contracts and facilitates interaction between participants on the network. Ether classic is the original blockchain, maintaining immutability in a decentralized manner.
The latter is necessary for any task that involves running distributed code. An example would be the development of a decentralized application (Dap) such as CryptoKitties, where user-generated cats are traded on the Ethereum network. Ether classic was created by the original Ethereum founders to preserve stability in the ecosystem and protect against potential censorship of its code and its token. Ethereum’s internal economy is designed to enable new intelligent contracts and may become valuable as an alternative to bitcoin over time.
The latest Ethereum merge of proof of stakes:
Two consensus algorithms are used in Ethereum; proof of work (POW) is the older and less energy-intensive algorithm. It was introduced and can be found on bitcoin, which uses it to secure its blockchain combined with proof of stake (PoS) that allows a person to efficiently secure the network, minimizing mining costs and incentivizing people to run nodes (miners). Ethereum plans to move to PoS in 2022; this move has been on the roadmap for a long time and has a lot of support.
It facilitates the development of smart contracts, which the user can compile into bytecode for the Ethereum Virtual Machine (EVM). Solidity’s goal is to be as easy to use as possible while at the same time being as syntactically strict as possible and having a precise specification that allows users to determine what their code will produce at runtime quickly.
Use case of Ethereum in different industries:
The growing Ethereum community has spawned several platforms that provide services across various industries, including finance, healthcare, and real estate.
Business owners interested in blockchain technology but with little-to-no technical background are eager to see what integration looks like. Though Ethereum is not yet an easy concept to grasp for traditional clients, businesses that have successfully implemented it have reaped the benefits of increased flexibility and automation.
In financial services:
Global banks are looking at blockchain technology as a way to increase their efficiency and cut costs by streamlining internal processes. Accenture estimates that institutions spend $80-120 billion on infrastructure and an additional $100 billion yearly on maintenance and support. Ethereum smart contracts could provide an efficient solution to this issue.
A recent Accenture report estimates that blockchain technology could add $110-165 billion to the US economy by 2025. The corporate blockchain development market is valued at a conservative $411 million dollars, and this number is expected to grow exponentially as the industry matures. In addition, intelligent contracts can drastically alter banks’ operations by automating compliance functions and processes within existing systems.
Challenges you can face:
In the beginning, Ethereum was only available for main-net (1.0) testing. It means that developers could write a smart contract, but it could not be deployed on the network. One of the biggest challenges within this ecosystem is difficulty in understanding and navigating how to ensure your particular type of application will work in the blockchain environment. The biggest challenge has been a lack of trust due to hacking attacks and other potential issues, which can threaten an entire project’s credibility, reputation, and the major investors’ money.