The crypto community is looking forward to the full update of the Ethereum blockchain, which promised so many grandiose changes that will allow the platform to fundamentally change the very concept of the crypto space. But what is ETH 2.0?
Ethereum – More than a coin
For the uninitiated, cryptocurrency starts and ends with Bitcoin. This is not surprising. Bitcoin is on everyone’s lips, with its move to ever-higher historical highs and its adoption by the likes of Tesla and PayPal.
Bankers get uneasy just at the mention of it, and books have been written about it. It is the most preached of all cryptocurrencies, with a seemingly endless string of zealous disciples bent on self-destruction to proclaim it the savior of humanity. For them and many others, Bitcoin is the original, and still the best.
However, if you delve a little deeper into cryptocurrency, you will quickly notice that there are not only thousands of other projects, but also one name in particular that pops up again and again. It won’t be long before you realize that Ethereum is behind most of what’s happening in the crypto space, other than Bitcoin. In fact, there are strong arguments that Ethereum is as important a project as Bitcoin, and perhaps even more important.
Взглянув на CoinMarketRate вы увидите, что Ethereum имеет рыночную капитализацию, уступающую только Биткойну, и в некоторой степени опережает своих ближайших конкурентов в этом отношении. But to consider Ethereum and its ETH coin as the second largest cryptocurrency is to greatly underestimate the entire project.
ETH is just one part of what Ethereum is: it’s not just some altcoin that we’re talking about here. The ambitions of the Ethereum project, what it has achieved so far and what it hopes to achieve in the future, make Bitcoin seem a bit one-dimensional in comparison.
The basic level of cryptocurrencies
Recently, a lot of interesting things have appeared in the world of cryptocurrencies. Yes, there is something to do with Bitcoin, but there is also the explosion of decentralized finance (DeFi) and the recent frenzy around non-fungible tokens (NFT). These last two topics of conversation owe much of their existence to Ethereum, which over the years has provided a platform for thousands of other crypto projects to build on.
Ethereum was conceived and built as a full-fledged crypto ecosystem, offering a blockchain on which all kinds of other platforms and currencies could be hosted. On its website, Ethereum describes itself as a technology that is home to digital money, global payments, and applications, which itself functions as a ” digital economy.”
The technology developed by Ethereum has already spawned thousands of projects, and new ones are constantly emerging. Indeed, many of the largest and most valuable crypto projects and tokens themselves have a multi-million dollar market capitalization and operate on the Ethereum network. While Bitcoin is concerned with storing and transmitting value, Ethereum is focused on creating value and continuously growing the cryptocurrency space.
However, for all its success, Ethereum is facing some serious challenges. It has become bloated due to its simple functionality, its network has slowed to a crawl under the weight of all the traffic it has to handle. Change is coming, though at a seemingly snail’s pace. Right now, everyone is talking about Ethereum 2.0 , the next iteration of this all-powerful project, which we hope will help it reach its full potential.
Let’s take a look at what is expected from Ethereum 2.0 and why it is so hotly debated by the crypto community. We will look at the issues that this update is designed to fix, what can be achieved with it. But first you need to take a closer look at the current state of the project, as well as study its history and what it has achieved so far.
History of Ethereum
The Ethereum project was first described in 2013 by a nineteen-year-old programmer named Vitalik Buterin. He, an early university dropout, a Canadian citizen from Russia, became a legend of the crypto space, despite the fact that he was only twenty. Buterin conceived Ethereum with the idea of bringing “universal flexibility”to the blockchain. His goal was to create a platform that others could use to build their own programs and applications.
Several other figures were also involved in the creation of Ethereum, the most famous of which were Charles Hoskinson (later the founder of Cardano), and Dr. Gavin Wood (the author of the Ethereum Solidity programming language, and later the founder of Polkadot). The two left the project due to disagreements over its further development.
The Ethereum network was launched in July 2015 after crowdfunding conducted a year earlier. Wood’s contribution played an important role in the development of the network, as it was he who developed the Ethereum Virtual Machine (EVM), “the environment in which all Ethereum accounts and smart contracts live.” All the inputs and outputs of the EVM are too complex to describe in detail here, but they are essentially smart contracts that allow you to create applications on Ethereum.
Smart contracts are self-sufficient and work similarly to vending machines. Invest some money, choose a product, and the machine will give it out. Programmers can write smart contracts, which can then form the basis of programs and applications running on the Ethereum blockchain. Again, the complexity of smart contracts is a matter of more detailed study, but it is important to know that Ethereum is designed to allow developers to use its network for their own projects.
This functionality allowed Ethereum to evolve rapidly as projects flocked to its platform. The ETH coin was developed to pay for the use of the network by these developers, although in 2014, Buterin called Ethereum a non-profit organization. As the popularity of the network grew, ETH was used more and more by developers and users. This use has led to an increase in the value of ETH, despite the fact that the coin does not have a fixed supply.
Dapps, DeFi, and Stablecoins
Projects running on Ethereum are known as decentralized applications (dapps. They work just like the apps we know and use every day, but without a single point of control. Using the Ethereum blockchain, they can permanently store transaction history and other data without having to resort to the expensive process of creating their own blockchains.
The field of decentralized application development has grown rapidly since the creation of Ethereum, and now thousands of projects have decentralized applications running on the network. Dapps thrive in a number of sectors, primarily finance, technology, gaming, art, and collecting. These decentralized applications are sometimes referred to as part of Web3 , the next iteration of the Internet in the blockchain era.
Now, decentralized applications offer everything from cryptographic-based financial services, to online games and virtual worlds. You can use them to browse the web, bid, buy art, or stream music. Many Ethereum-based decentralized applications have become major crypto projects in their own right, aided in large part by another aspect of the Ethereum platform: the ability to create and issue other tokens.
As a result of this functionality, decentralized applications can run their own tokens using the ERC-20 Ethereum token standard. These tokens work on the Ethereum blockchain, but can be sold on the open market along with most other cryptocurrencies. As a result, many of the top 100 cryptocurrencies (and many others) are tokens that run on the Ethereum network. These include projects such as Tether, Uniswap, and Chainlink, which means that ERC-20 tokens are traded in huge volumes every single day.
The popularity of Ethereum as a blockchain for developers has brought it to the forefront of the decentralized finance revolution (DeFi), which has resulted in thousands of projects that have challenged the world of traditional finance. DeFi essentially eliminates financial intermediaries by allowing people to conduct financial transactions on a peer-to-peer network, without any cuts being paid to intermediaries.
In 2020, the popularity of DeFi has increased dramatically. New users invested in protocols that allowed them to take out loans, lend their cryptocurrencies to others, exchange coins and tokens on decentralized exchanges, and much more. More than $50 billion is currently locked in the DeFi sector, and each of the best protocols runs on Ethereum.
The Ethereum network is also actively used by those who trade and use stablecoins-cryptocurrencies linked to the value of a real currency (usually the US dollar) or other assets. These linked values help reduce a significant portion of the risk associated with trading other, more volatile cryptocurrencies, and their use is becoming more common.
According to a recent report by Consensys, three-quarters of all stablecoins now run on Ethereum, and in 2020, the network processed more than $ 1 trillion worth of transactions. Once again, most of the hard work with cryptocurrency is done by just one platform – Ethereum.
End of the first part.