A Detailed Review of the Ethereum (ETH) Platform

hands ethereum

Contents:
(please click the topic to scroll down to it)

  1. What is Ethereum?
  2. A brief history of Ethereum
  3. How is the market of Ethereum set up?
  4. Ethereum fluctuations and forecasts for the future
  5. Will Ethereum emission be limited?
  6. The difference between Ethereum and Bitcoin
  7. Conclusion

1. What is Ethereum?

If we do not delve into the jungle of the blockchain technology, do not use complex cryptographic terms and characterize Ethereum in simple words, then it can be called a multifunctional open platform. The main purpose of Ethereum is the creation and launch of third-party applications, which are based on the blockchain technology using smart contracts. The project has the same currency ETH, which can also be used as a means of payment and as a guarantor of the performance of smart contract obligations. Ethereum is a real revolution in the cryptocurrency world.

2. A brief history of Ethereum

The history of this project begins in 2013. It was then that the creator of Ethereum, Vitalik Buterin, came up with the idea of ​​how to improve and expand the capabilities of the blockchain technology. Later Vitalik said in an interview:

I just walked down the street and thought about the project, after this walk I came home and wrote the Whitepaper. Later I sent it to my friends, they sent it to theirs, that’s how it all started.

Fund-raising began in 2014. 31191 Bitcoins were collected for the development of the project (which was slightly more than $18 million according to that rate). The Ethereum platform was launched for the first time in the summer of 2015, but the full-scale launch took place only in the March of 2016, at the same time with the beginning of the Homestead protocol.

Buterin himself got fond of this trend at the dawn of its development, when he worked in the print edition of Bitcoin Magazine. At this time he was actively studying programming and cryptography. Buterin has Russian roots, but lived most of his life in Canada. He currently lives in the United States.

Vitalik Buterin.
Photo: John Phillips / Getty Images

3. How is the market of Ethereum set up?

We have already mentioned in our article such a thing as a smart contract. Now let’s take a closer look at this and try to figure out how the Ethereum market works.

A smart contract is a special algorithm that makes it possible to perform certain actions only when the conditions are laid down in it. This can be potentially used in any field of activity where there is a need for agreements between two or more persons. As an example, we use an agreement between the landlord and the tenant. As long as the latter regularly pays rent, he/she can use it without hindrance. But in case of non-fulfillment of their obligations, which are prescribed in the smart contract, that is, untimely payment, the algorithm can be configured to lock the door locks. The tenant can not get inside until he/she completes his/her part of the deal. The example sounds a bit futuristic, but it perfectly reflects the principle of the smart contract. Another very important feature of this agreement is its absolute decentralization. That is, there is no intermediary in the form of a bank, guarantor, etc.

This lyrical digression was necessary in order for you to have a clear understanding of the basic principles of the platform. Ethereum market consists of ICO startups, which are built on smart contracts. They guarantee the timely trasfer of tokens to investors’ wallets. The ICO market is very rapidly gaining popularity. We remind you that all startups attracted about $5 billion in 2017, and in the first 5 months of 2018 this figure has already exceeded $9 billion.

4. Ethereum fluctuations and forecasts for the future

The historical maximum of the Ethereum rate was on the 14th of January, 2018, it was $1428. After that, a long period of price fall began. So far, 2018 can not boast of good rates for Ethereum and other high-capitalization coins. The long and rapid downward trend of the first quarter of this year was marked by a number of factors:

  • overheating of the market;
  • the ban on advertising the initial coin offering on the world’s leading sites (Google, Facebook, Alibaba, etc);
  • pressure coming from regulators.

At the time of writing, Ethereum is in the trading range of $520 – $540 per coin. According to the forecasts of many analysts, the coin has all the chances to grow to $700 – $ 1000 by the end of the year, but this depends on an adequate policy of regulators in relation to the ICO market.

5. Will Ethereum emission be limited?

In June, official information from developers appeared that more than 100 million coins had been issued. Two years ago Buterin stated that such an amount of ETH would have been generated no earlier than by the 22nd century. In April of this year, he announced the limitation of the emission of Ethereum in the amount of 120 million coins, but later admitted that it was an April Fool’s Day joke.

Emission of Ethereum according to https://etherscan.io 

We remind you that 72 million ETH were initially generated, and another 28 million pieces were released from 2015 to mid-2018. The project has one problem. It is the Ethereum (ETH) inflation  which is now about 10% annually. In the nearest future, it can be solved by switching to the Casper protocol and the PoS algorithm. According to estimates, this will help to reduce inflation by 20 times, down to 0.5% per year. There is no official confirmation from the team on the issue of emission limitation, but the next dangerous line for the project will be the figure of 144 million ETH.

6. The difference between Ethereum and Bitcoin

For many people who do not have sufficient knowledge of cryptocurrencies, the fact that Ethereum is much more advanced and functional than Bitcoin will most likely come as a surprise. These two coins have something in common, but if you truly understand, the differences between them are much greater than similarities. In short, Bitcoin is a half anonymous payment platform, and Ethereum is the environment for developing and running applications based on the blockchain technology.

These two coins have different purposes, if you need to pay in coins in online stores, then definitely choose BTC, but if you need to create your own application, you can not do without Ethereum.

7. Conclusion

The Ethereum project rethought the blockchain and literally revolutionized the industry. The technology of smart contracts allowed to launch multibillion-dollar startups in the shortest possible time without effort and intermediaries. In the nearest future, smart contracts might be used in almost all spheres of life.

At the moment, Ethereum has a problem with inflation, which is about 10% per year. The transition to the Proof-of-Stake algorithm should significantly reduce it. According to unconfirmed reports, the issue of the coin can be limited to a figure of 144 million coins.

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