Ethereum (ETH) cryptocurrency: main characteristics and features, future prospects
The Ethereum cryptocurrency is the second most popular and capitalized cryptocurrency after bitcoin. Experts rightfully call Ether the main competitor of Bitcoin with positive prospects. In this article, we have collected all the relevant and most important information about the creators, characteristics and features of Ethereum, its weaknesses and strengths. After analyzing the opinions of several leading experts, we made our conclusions based on them about the future prospects of the Ethereum cryptocurrency.
A comparative table of the two strongest cryptocurrencies of the Bitcoin and Ethereum market:
Cryptocurrency Ethereum: the history of creation
Unlike the bitcoin story, the creator of Ethereum, Vitaly (Vitalik) Buterin, has never hidden his authorship. The main idea of his project is to use blockchain technology not only for cryptocurrency transactions with Ethereum, but also as a platform for games and other applications.
The project was co-founded by mathematician Charles Hoskinson, programmer, Microsoft researcher Gavin Wood, cyberneticist Mihai Alize and Canadian entrepreneur Anthony Di Iorio. Hoskinson and Wood later left the project and founded other blockchains. In particular, Polkadot and Kusama, launched by Wood, are considered possible main competitors of Ethereum.
The Ethereum launch company was established in 2014 in Switzerland, whose legislation is loyal to cryptocurrency projects. The sale of Ethereum coins began in July 2014 as part of the ICO, whose participants exchanged bitcoins for Ethereum. There were no minimum or maximum limits for participation in the ICO.
The project to launch a new cryptocurrency turned out to be very successful, unlike many others who tried to repeat the success of Ethereum. The profit of ICO participants amounted to tens of thousands of percent.
The project is constantly developing and preparing for the transition to PoS technology (Proof of State, proof of ownership of a share). This will significantly increase the bandwidth of the Ethereum network.
Ethereum: features of cryptocurrency
The following features of Ethereum can be distinguished:
- Most of the project’s algorithms work in the Solidity language developed by Wood;
- you can make a profit both with the help of mining and with the help of stacking;
- Ethereum tokens are traded on many cryptocurrency exchanges, both centralized (CEX) and decentralized (DEX).
Ethereum blockchain can be used by third-party developers to create new types of cryptocurrencies.
Ethereum technology and the principle of operation
The Ethereum platform is based on the following technological solutions:
- Ethereum VirtualMachine (EVM), a virtual computing machine that stores all operations on each node of the blockchain and is an environment for implementing smart contracts;
- Solidity, an object-oriented programming language for writing smart contracts;
- Mist, a wallet for storing cryptomonets and creating smart contracts.
The issue of new coins is not limited, but the complexity of their release algorithms is constantly increasing (such a mechanism is called a “complexity bomb”). This prevents ethereum inflation.
Strengths and weaknesses
The advantages of Ethereum include:
- multifunctional: the Ethereum blockchain is also used for the development of games and other projects;
- short time (~15 s) to create a block compared to Bitcoin (~10 min);
- unlimited issue (Bitcoin issue is limited to 21 million coins);
- low volatility (riskiness) compared to other types of cryptocurrencies.
The disadvantages include the influence of the human factor, which can lead to errors in smart contracts, and the high cost of mining.
How to get Ethereum
There are the following ways to get Ethereum:
- mining (mining): the user generates new blocks on his computer, receiving a reward with cryptomonets;
- staking: receiving passive income in the form of interest for “freezing” a certain number of coins;
- buying currency on cryptocurrency exchanges.
Each of these methods has its advantages and disadvantages. Mining is the most profitable method, but it requires large initial investments and subsequent costs. As is stacking, although the initial investment in this case is much smaller. It is better for beginners to purchase ethereum and other types of cryptocurrencies on specialized exchanges or through exchangers.
How and where to store Ethereum
To store cryptocurrencies, software products are used – crypto wallets. They are of the following types:
- hardware that is stored on devices similar to a USB flash drive;
- online – internet services provided by third-party resources;
- desktop – stored in the memory of a personal computer;
- mobile – in the form of an application for mobile devices.
Wallets can provide users with cryptocurrency exchanges, but these are the least reliable solutions. Experts of the cryptocurrency market do not recommend storing a large amount of currency on exchanges.
There are non-standard solutions, for example, the Jaxx wallet, in which you can store Ethereum, is arranged in the form of a browser extension.
Ethereum Growth Prospects
Ethereum, like Bitcoin, contributes to the decentralization of the global economy. The anonymity and security of cryptocurrencies, according to experts, can cause global changes in economic processes. But there are also pessimistic opinions about this. Some analysts consider the growth of Bitcoin and Ethereum to be a bubble, similar to what it was in the 2000s in the market of Internet companies (dot-coms).
Chart of the Ethereum exchange rate against the dollar for all time:
The forecasts for the development of Ethereum are mostly favorable not only for this type of cryptocurrency, but also for the ecosystem as a whole. On the basis of the Ethereum blockchain, you can create games, corporate blockchain chains, new types of cryptocurrencies. Most likely, the scope of the system will grow, so interest in Ethereum is unlikely to fall.
Published: 1 September, 2021