We all know that Bitcoin was the big name in cryptocurrency with its secure system and decentralized ledger. But this doesn't stay so long, especially after Ethereum came on the scene.
Ethereum saw a chance to build on what Bitcoin had started but refused to stay ordinary. First of all, it introduced the concept of smart contracts, which brings more efficiency and better security for traders.
Ethereum steals the spotlight thanks to smart contracts, but we'll discuss it later in this article. It also has next-level innovations that are worth exploring. First, let's discover its core features below.
Ethereum's Core Features
Let's shortly go back to 2015, when Ethereum was introduced. Vitalik Buterin created Ethereum with the idea that blockchain technology could do more than power digital currencies.
Its core vision was to enable a decentralized platform, which might sound similar to Bitcoin. What made it different was that developers could build applications that operate without intermediaries. This idea then brought up the concept of smart contracts and, soon, decentralized applications (dApps).
Since its launch, Ethereum has been upgraded through multiple. Its robust features and thriving developer community help it manage its position as a key player in the blockchain space. Now, what are its core features?
Decentralization and Security
At its core, Ethereum is all about decentralization. It operates on nodes, which are a distributed network of computers. This is where it gets complex.
A decentralized ecosystem means no single person or organization controls the entire network. Instead, control is spread out, which results in a more resilient and secure system.
Does this ecosystem bring more good than harm? Yes, decentralization enhances security in several ways. The main ones are that it reduces the risk of a single failure point and makes it nearly impossible for malicious actors to corrupt the system.
Not stopping there, the consensus mechanism adds an extra layer of security. This mechanism makes sure that only legitimate transactions are recorded on the blockchain.
Smart Contracts
We mentioned smart contracts in the beginning, so let's discuss them further. Smart contracts simply mean self-executing contracts with terms and conditions written directly into code. What does this mean?
You can refer to a digital contract that automatically validates the terms of an agreement without needing a middleman. For instance, if you rent an apartment through a smart contract, it will automatically transfer the payment to the landlord and complete the required conditions.
These contracts run on the Ethereum blockchain and execute automatically when predefined conditions are met. They wipe away the need for intermediaries and reduce human error risk. Moreover, they ensure that agreements are executed as agreed.
There are many explainer videos elaborating on how smart contracts work. One of which you can watch here:
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Ethereum Virtual Machine (EVM)
Ethereum also has a so-called Ethereum Virtual Machine (EVM). This is a decentralized computer that runs all the smart contracts and dApps. In other words, you can call EVM a global supercomputer.
The EVM processes and executes developers' code in a secure and isolated environment. Each Ethereum node uses the EVM to ensure the same code works the same way everywhere in the network.
At the same time, smart contracts and dApps work the same way, regardless of which node is processing them. This technology maintains the integrity and reliability of the Ethereum network.
Customizability
One of the challenges of app developers is that they can't build highly flexible blockchain apps. However, with Ethereum, they can easily meet their needs.
Before you wonder, Ethereum has a programming language called Solidity. This language is designed specifically for writing smart contracts.
Developers can design custom tokens, launch decentralized finance (DeFi) projects, and build various apps according to their needs. Moreover, Ethereum's flexibility also means adapting to innovations and use cases.
Its high level of customizability has helped blockchain app developers, or perhaps you, to create a new type of cryptocurrency or build a complex decentralized app.
What Makes Ethereum the Cool Kid on the Block
Let's dig in more. Ethereum has several aspects that have made it leap ahead of other cryptocurrencies. We've compiled five interesting aspects of Ethereum that are surely impressive.
Diverse dApps and Platforms
Decentralized applications, or what we call dApps, can do all sorts of things. They don't need a central authority to operate. Global developers can build games, financial services, or anything else to help users.
In terms of categories, gaming apps make up 37% of the total. DeFi (Decentralized Finance) apps are next with 32%, followed by social dApps at 13%, while NFTs (Non-Fungible Tokens) at 7%.
DeFi Innovations
Image via Medium
Decentralized Finance, or DeFi, focuses on financial services like lending, borrowing, and trading. However, DeFi doesn't rely on traditional banks or middlemen to power these services.
The Ethereum blockchain powers it and uses smart contracts to handle transactions automatically. This system helps users make deals even more flexible and provides better security.
NFTs and Digital Collectibles
Image via TheRecordNopal
We are sure you've heard about NFTs before. But little did we know that Ethereum is the main platform where most NFTs are created and traded across the crypto space.
Non-fungible tokens (NFTs) are unique digital assets. They represent anything from art to in-game items and collectibles. Every NFT is authentic and one-of-a-kind. They can't be exchanged one-on-one with one another.
Then, what does Ethereum's blockchain technology do? It securely records ownership and authenticity of digital items, enables both creators and collectors to buy, sell, and trade NFTs, and supports industries like the furniture sector, such as MGK Asia, by facilitating secure and transparent transactions.
Developer Community
Image via Ethereum Community
Thousands of global developers are constantly improving the Ethereum platform. They create new apps, tools, and resources to provide better services to users.
This community-driven approach is a big part of what makes Ethereum highly innovative and adaptable. The community is also active in organizing events. We're sure Ethereum wouldn't be where it is today without them.
Resources
Ethereum is filled with valuable resources. If you're interested in joining the ecosystem, you can access many documentation, tutorials, and online courses. You can also join forums to help you get started and make connections.
Looking Ahead
What can we expect next from Ethereum? Well, Ethereum 2.0, or Serenity, is a major upgrade to the Ethereum network. This upgrade improves the scalability, security, and sustainability of the platform.
Many believe that Ethereum 2.0 will make the platform even more dominant. Some also predict that Ethereum could become the backbone of a new decentralized economy.
In terms of applications, the Ethereum technology is predicted to be highly used in finance or DeFi. We can also anticipate more blockchain-driven games and digital assets.
In addition, Ethereum could play a significant role in developing Web 3. Web 3 is another version of the Internet with a decentralized system. This system gives users more control over their data and online experiences.
Wrapping Up: Ethereum vs the Rest
Ethereum's flexibility and security give it a significant edge over the rest. Moreover, its use cases across various aspects of life have further enhanced its competitive advantage.
In the future, Ethereum is also expected to address some of the most pressing challenges in blockchain, such as scalability and energy efficiency. We also hope it will shape technological advancement in the coming years.
FAQ
In short, what makes Ethereum stand out from other blockchains?
One word that can describe Ethereum as a whole is versatility. It has more features and functions compared to other blockchains. Bitcoin, for example, is mainly for transactions.
Meanwhile, Ethereum is designed to handle complex applications while also functional for transactions. It has the ability to host decentralized apps (dApps), which makes it the go-to platform for developers wanting to create apps on the blockchain.
Why is Ethereum transitioning to Ethereum 2.0?
Of course, there are some reasons behind this shift. Right now, Ethereum uses Proof of Work (PoW), which requires a lot of computational power, making it slow and energy-hungry.
On the other hand, Ethereum 2.0 is known as the merger of Proof of Stake (PoS), which focuses on scalability and sustainability. This update is expected to make transactions faster, cheaper, and way more eco-friendly by reducing the need for massive energy consumption.
Why are gas fees on Ethereum a hot topic?
Yes, gas fees were once a hot topic on Ethereum, but we believe more and more people will eventually understand their meaning. Gas fees are the transaction costs users pay to execute actions on the Ethereum network.
Unfortunately, these fees go up when the network is congested. They are something users have to budget for, and they can be pricey. However, the good news is that Ethereum 2.0 aims to lower these gas fees by making the network more efficient.
Author Bio
Andre Oentoro is the founder of Breadnbeyond, an award-winning animation video company. He helps businesses increase conversion rates, close more sales, and get positive ROI from explainer videos (in that order).