Little by little the world of cryptocurrencies becomes more competitive with the launch of more and more options in the market. Ethereum is an example of how you can become an uncomfortable competitor by putting the industry giant, Bitcoin, in serious trouble.
And it is that with a fight that reminds us a lot of the fight between Coca Cola and Pepsi, Ethereum has put the market on the lookout with its value offer and its considerable improvements to cryptocurrency technology. That is why here we will talk about this virtual currency.
➡What is Ethereum? ✨
As we already anticipated, Ethereum is a virtual currency which is designed under new concepts. We can say that is a cryptocurrency which is designed under a decentralized open source platform built under an integrated environment using the Turing programming language.
The main feature of Ethereum is that this cryptocurrency goes beyond being a cryptocurrency. This is due to the fact that it has developed an ecosystem in which it allows the development of platforms and the storage of data without being hosted on a server, which reduces the impact of technical failures.
The chain that Ethereum operates under has significant improvements versus other cryptocurrencies such as Bitcoin. This is due to the fact that the integration of the Blockchain has allowed solving problems such as the speed of creation of the blocks, the scalability or the volume of transactions allowed.
Furthermore, it is known that Ethereum is one of the most used bases for the construction of new cryptocurrencies. It is enough to see how many platforms use both the Ethereum Blockchain and its ERC-20 Token for the construction of their environments. This shows the quality of the design of this cryptocurrency.
➡4 points you should know✨
- Dapps or distributed applications: Ethereum not only operates as a cryptocurrency, it has also created an environment for the development of applications based on Blockchain. The best way to describe it is to see Ethereum as an app store, for example the App Store, and the applications developed here as mainstream apps.
- Smart contracts: Smart Contracts allow the creation of different types of contracts using again the Blockchain as a backup. It could be said that these contracts are the key to access to the Blockchain, since they serve as mechanisms for all types of payments and services.
- The World Computer: So that the Dapps can operate integrated into the Blockchain, a system called EVM of Ethereum Virtual Machine or The World Computer is used. This protocol enables Dapps to operate properly on the blockchain by creating thousands of disparate Dapps instead of creating specific blocks.
- Ethers: You could say that Ether is the fuel behind this cryptocurrency. This is the official name that this Token or Coin receives and which is used as payment for transactions and rewards. For example, when mining Ethereum you will be receiving an Ether for your services.
➡Pros of Ethereum✨
- Accessibility in the development of Dapps: One of the points in favor of this cryptocurrency is the fact that its platform allows the development of Dapps easily. And you don't need to be an expert programmer to be able to take advantage of the tools for the development of Apps that Ethereum offers.
- Smart contracts: You will not only be able to create smart contracts for different categories or concepts. These run automatically, without the need for a third party to enter the game, which makes their operation not only much more secure, but also much more anonymous.
- Unlimited options: Unlike other platforms which limit the app creation parameters, the opposite happens in Ethereum. AHere the user has the freedom to develop Dapps as his imagination allows. This is a great advantage when contributing to the creation or development of much more innovative environments.
- Transaction speed: Another common problem in many virtual currencies is the speed of transactions. In the case of Ethereum, A protocol known as Ghost has been implemented which allows to accelerate the processing speed, achieving transactions in only approximately 14 seconds.
- Rewards for mining: Finally, you should know that the rewards for mining that Ethereum offers are among the most attractive. This is because the Ethereum POW known as Ethash often rewards 5 Ethers for each block that it has managed to decipher and verify. This makes mining of Ethereum very attractive to miners.
➡Differences between Ethereum and Bitcoin✨
- Amount of coins: Most cryptocurrencies on the market have a maximum limit of coins to be generated or mined. In the case of Ethereum, This limit does not exist, so you can create as many coins as the market demands.
- Mining: More than mining, the Ethereum process is different, since here you receive rewards for the development of Dapps. That's right, miners receive their Ethers for developing and running Dapps highlighting that, unlike Bitcoin, the rewards do not go down but stay the same.
- Transaction speed: One of the biggest problems facing Bitcoin is the fact that the verification speed of each block is very slow, up to 10 minutes. Instead, In Ethereum we can find that the validation of the transaction is done in just 12 seconds, since it uses the Ghost protocol to accelerate it.
- Usage costs: To evaluate the cost of operation, Bitcoin uses a method in which it evaluates all the same, since the block is limited by its size. Ethereum evaluates the cost of the commission depending on the resources consumed from the network.
- Language: Unlike the rest of cryptocurrencies, Ethereum enables the development of Dapps on smart contracts and Blockchain technology. This is possible thanks to the integration of the Turing language in the development and programming of the Ethereum environment or platform. This makes the Dapps creation and linking process more efficient.
Financial analyst and economist with a master's degree in finance.