Ethereum

The Ethereum platform is part of the blockchain, which makes it a public platform. In other words, the Ethereum platform is decentralized and will work on a peer to peer contract in order to create programable transactions so that you are able to mine the Ethereum cryptocurrency known as ether.

The Ethereum platform was first thought of back in 2013 by Mr. Vitalik Buterin in an effort to create a new generation of cryptocurrency on a brand-new decentralized platform. But, his project did not get the funding it needs to be developed until 2014.

Vitalik was a programmer that worked with bitcoin as well, which is where he got some of the protocol that would later be reflected in Ethereum. Although, whenever Ethereum was actually being developed, it was programmed to work off of a distinct set of protocols which made it become a better program because it was able to be flexible during development. Ethereum is flexible thanks to the Turing programming language. (You do not have to know this programming language in order to use Ethereum, this is just the language that the program is written in).

During the program’s development, many of the developers described it as an extension of blockchain that went beyond the peer to peer system that was used by bitcoin. But, just like with every other program, there were questions that users raised about the security and scalability of the platform. Still, in 2014, there was an award given to Buterin for the co-creation and invention of the Ethereum platform. This award is known as the World Technology Award.

During the summer of the following year, the first live blockchain for Ethereum was launched. Ethereum was originally developed by a Swiss company that was known as Ethereum Switzerland GmbH, which was tied to a non-profit foundation known as the Ethereum foundation. (If you have used Python, then you know that there is also a Python foundation that is there to help users with their program, this is similar to that).

The following year, the value of ether had a net worth that exceeded one billion dollars. Vox made a note saying that this new digital currency was going to be a major challenger to bitcoin because it offered such a wide range of services that bitcoin was unable to offer at the time.

There are a large number of people who do not know that you do not have to choose between Ethereum or bitcoin, there are other cryptocurrencies that you are able to choose from, it all depends on what you find out from your research of those cryptocurrencies.

Ether

Ether is the token that is used on the Ethereum blockchain. Similar to bitcoin, this cryptocurrency is going to be exchanged in a similar fashion. In fact, Buterin took his shares and sold them somewhere else and got about twenty-five percent of the ETH holdings that he had in his possession. When he was questioned as to why he did this, he told them that it was sound financial planning. But, in reality, ether pays for computation services that are done on its network.

On the plus side, ether goes straight to your virtual wallet so that you can spend it at a later date. Much like bitcoin, ether does not hold any monetary value outside of the Internet, but it is most likely that you are going to find a way to use it on the Ethereum system so that you can get other currencies in your trades.

Despite the fact that it is not going to do you any good outside of the Internet, the contracts that you make on the Ethereum platform are going to end up benefitting you in the long run.

Pros and cons of Ethereum

Much like bitcoin, there are going to be pros and cons that you are going to discover when using the platform. One of the things that they have in common is that they both work off of the blockchain, but that does not mean that they are going to work the same, in fact, they are two very different programs with their own sets of pros and cons. First, we are going to discuss the pros of Ethereum.

Contracts are typically written properly and enforced as written

Whenever a contract is written on Ethereum, it is executed exactly as it is written, therefore, when writing a contract, you need to ensure that you are getting everything that you want out of the contract.

At the point in time that a contract is written, it may have to be managed by a lawyer or even go as far as to be enforced by a judge. Even if you have not gone through it yourself, it is pretty certain that you know just how expensive this process is despite the fact if you are in the private or public sector. The Distributed Autonomous Organization or the DAO is the governing authority and many people go to great lengths to have their contracts written properly or enforced properly, but they all have to operate inside of the confines of the DAO.

Due to the DAO being in place, there is no need for lawyers or judges whether they be technical or human which saves a lot of money on the user. All the while, Ethereum is continuing to adapt and grow to strengthen in areas that have never even seen before in the world of technology. Sometime in the future, we may even discover that there will not be any need for judges or lawyers at all because there are going to be contracts that are written out and enforced by the DAO and they are going to be enforced properly.

The DAO and crowdfunding

Ethereum has crowdfunding that is known as Digix and it has raised over five million dollars which has gold to back the money and this is known as a DApp.

All of the funding for Digix was raised in a fleeting period of time as well as being raised completely on the Ethereum platform by using ether. If a user was to become an investor in something similar in the future it would be ambiguous due to the fact that you are not going to know what is going to happen to the company. But, this is similar to other investing platforms as well because you never know if the company is going to go under at any given point in time or not.

With the use of the DAO crowd sale, DApp helped to raise the funds that were needed for the company to get their start. Not only that, but they were able to set up a board that was put in place to vote on the decisions that needed to be made such as the distribution of coins and the other things that needed to be voted on so that lawyers, investors, or banks did not have to get in on the decision-making process.

This shows that whenever two options are placed on the table, there is going to be an option that is simpler and a single layer for the technology which is going to be preferred by everyone who is going to be using the program. This makes for a better experience for the users and more money for the investors.

Low costs and automation on the Ethereum platform

Since Ethereum uses a DAO, there is going to be some possibility that could be designed to not cost anything since there are a vast majority of the business functions on the platform that can be executed automatically. But, since there is an expense that is going to be associated with the execution of smart contracts, there has to be a cost for a DAO to be executed. However, these costs are insignificant compared to all of the costs that come along with having an office and having to pay employees enough to get to and from work each and every day on top of all of the utility bills that there are going to be.

Whenever you take a look at EtherEx, you will notice that they attempted to set up a cryptocurrency that copied the same parameters of Ethereum which meant that it was decentralized and trustless. But, the foundation ended up staying in an infrastructure where people are taking votes on the various things that have to be voted on, like how they can reduce costs and still remain a nonprofit organization.

So, in essence, any business that is built inside of the DAO for Ethereum will be able to reduce the costs that are involved in setting up a business since you are not going to need a building where employees meet every day. This is because everything is going to be done through the use of technology and is going to be able to be done wherever the employee is. The only thing that is going to have some cost is the cost of all the computations that have to be done which is going to be smaller than having utility bills, supply bills, and rental bills added up just so that you have an office where everyone meets.

However, those are just a few of the pros that you are going to come across whenever you are working with Ethereum. The cons are going to be the things that no one wants to necessarily hear because it will make their job harder. But, you need to know the pros so that you can get out of your comfort zone and make it to where you are making the proper decisions to get the job done efficiently.

When looking at Ethereum, the biggest disadvantage is the fact that it is still new and working on its growing pains. Bitcoin on the other hand is more established and is not going through all of the growing pains that Ethereum is. That is because Ethereum wants to surpass bitcoin in the operations that can be executed.

Since Ethereum wants to take out the need for lawyers and judges, there are some problems because it is taking out the people that can give users the information they need to make informed decisions. Computers are great and make things easier, but they have their own issues. In the end, humans are going to be the ones who can make sure that the code of the program is running the way that it is supposed to be.

With the platform constantly changing, the exchange of cryptocurrency is constantly changing. This means that there are going to be times that the servers are going to be down so that things can be updated and coding can be changed.

While things are always going to evolve & adapt to the world around us, it is not a dreadful thing. However, it is going to make it to where the users who are on a deadline are possibly late in turning in their project because the servers are down for maintenance.

Another disadvantage is that not all of your employees are going to be in one place at the same time. This means that you cannot make sure they get any extra information that they are needing, as well as making it to where you cannot hold important meetings with details that are going to be put into play right away. Since there are so many people in separate places and on at various times dealing with not only work, but their personal life, there are going to be some employees that are going to fall behind, but, this is not a bad tradeoff for not having all of the extra costs that come with making sure that all your employees are there in the same place at that same time.

Since Ethereum is so new, there are going to be a lot of people moving over to it from bitcoin. That way, they can be part of the latest changes that are coming up in the world of cryptocurrency. But, there are not going to be many people that know how to use Ethereum and it is going to be a major learning curve so that people get used to using a new platform.

Since people are not sure of how to use it, they are going to be hesitant to invest in it. This is going to leave a major opening for you to invest as much as you want since there is not going to be a lot of competition. However, there are going to be a few people who are going to jump off of the Ethereum train because they are not understanding it, which is going to cause the market not to thrive.

While there are negative things to Ethereum, you should not stop investing with it because it is going to be a new experience and there are going to be a lot of great opportunities that are going to come along with investing in Ethereum.

Problems You May Encounter with Ethereum

Take a look at anything new that has come out. There have been developmental issues as well as other things that have caused users to stop using them because they cannot dominate the software or the program. However, if you know the various issues that can stand in your way, you are going to be able to avoid them and dominate the program.

One problem is the scalability of blockchain since there are claims that are often repeated, such as the mainstream payment network process. There are around two thousand different transactions that take place each second on the blockchain. But, Ethereum can only process seven at a time. However, if you change the block size limit parameters, you are going to be able to support more transactions per second. However, there is a possibility that whenever Ethereum becomes bigger, there is going to be an impossible amount of transactions going on. But, the good news is that it is impossible for a user to run a full node. So, whenever a full node is relegated, then there is going to be a small collection of businesses that are going to be able to afford the resources for these nodes. So, you do not have to download the blockchain in order to run Ethereum.

In the end, the biggest issue is going to come in the creation of a blockchain that is going to offer the security that users want so that they are ensured the maximum size of nodes that are going to be powerful enough to support a high number of transactions.

There are some other issues that are going to cause some scaling issues, such as:

• How many users are on the network?
• If a user is using special hardware or hardware that is not specialized. In the event that the hardware is specialized then it is going to be more powerful and is going to require specific tasks.
• How likely it is that a user is going to be using unspecialized hardware.
• Some of the blocks that are used for transactions are going to require over half of the networks’ hash power in order to reverse a transaction. But, the solution to this is to have each transaction pay a small fee or offer a lower level of security. However, there are users that are going to be able attackers that other users will have to try and avoid. The hacker is going to reverse a transaction to get profits from that transaction. Ideally, a solution would work and maintain any properties that would generalize the account-based blockchains. But, the solutions would be specific to the currency as well as the domain registrations or any other specialized cases that would be considered acceptable.
• Yet another issue is going to be from the timestamps. Most blockchain blocks are going to be created every ten minutes. However, if a block is created, the payment system is going to slow down. On the other hand, should a block be created each second, then the centralization of the network’s efficiency is going to become a major concern. So, if the network can locate a medium where the blocks are not created too quickly to where the network’s transactions are created in a timely manner and the system is not harmed, then this issue will be solved.

So, the real issue is that there is a distribution creation problem which is going to include the incentive-compatible system. Because of this, there has to be an overlay on top of the blockchain to maintain its accuracy.

Other time-stamping problems are:

• All of the legitimate users are going to be working on a clock to allow the normal distributions to work in real-time which is about twenty seconds.
• Say you are working with two nodes. They are never going to be within twenty seconds of each other at any given time.
• One solution would be to rely on the concept that is already in place for nodes. It is this practice that allows for the proof of stake or the non-Sybil token to be enforced on the blockchain.
• It has been suggested that the system inputs a time that is going to be one hundred and twenty seconds or less on its internal clock where there are about ninety-nine percent of the nodes participating and doing what it is that they are supposed to do. But, this means that the system has to be self-consistent.
• Your system would still exist but it would not be reliant on proof of work from the users that are on the system.
• External systems would probably end up using this system as well so that it could stay secure and deflect any attackers that try to get up to twenty-five percent of the nodes.

You will find other problems that you are going to encounter when you are using Ethereum. But, keep in mind that the developers are constantly working to fix these problems so that the system is more user friendly. But, it is not ever going to be just enough to correct the issue because there is always going to be another issue that arises inside of the system or in the way that the system works.

Any user that finds a problem can report it so that it is placed in the queue of other issues that need to be fixed. Where the issue falls on the list is going to depend on what the problem is. One of the biggest things is to still use the system no matter what problems arise as you are using the system. Do this because you are the reason that the system is getting better.