Ethereum Review

Ethereum stands as an autonomous and open-source blockchain network, distinguished by its native digital currency, Ether. This platform serves as the foundation for a multitude of other cryptocurrencies and is notably utilized for the execution of decentralized smart contracts.

In 2013, Vitalik Buterin proposed the idea of Ethereum in a detailed whitepaper. Later, with co-founders, the project raised money through a public online sale in the summer of 2014. Ethereum’s current value shows an awesome yearly earning of more than 270%, making your money almost four times bigger since the summer of 2014.

The Ethereum blockchain was launched on July 30, 2015, and has since undergone various significant updates. These include “Constantinople,” “Istanbul,” “Muir Glacier,” “Berlin,” and “London.” “The Merge” occurred on Sept. 15, 2022, with the next major update anticipated by April 13, 2023. “Shapella” comprises the Shanghai and Capella upgrades. Moreover, another Ethereum update is expected by the end of 2023.

During a teleconference, Ethereum developers approved the details of the upcoming network upgrade called Dencun (Cancun-Deneb), expected to take place this year.

The key component of the upgrade is the Ethereum Improvement Proposal (EIP) 4844, known as Proto-Danksharding. This feature scales the blockchain by introducing a new type of transaction for large binary data arrays (blobs) and organizing their storage. The goal is to reduce fees for Layer 2 solutions based on Rollups technology.

Among other changes, the hard fork includes

• EIP-1153, which reduces fees for on-chain data storage and optimizes block space.
• EIP-4788, which improves the efficiency of cross-chain bridges and staking pools.
• EIP-5656, which makes minor changes to the Ethereum Virtual Machine.
• EIP-6780, which removes code that could hinder the operation of smart contracts.

Ethereum’s ultimate vision is to become a decentralized platform empowering users globally to create and operate applications that offer transparency, security, and autonomy.

Who Are the Founders of Ethereum? 

Ethereum boasts an extensive team of eight co-founders, who came together for the first time on June 7, 2014, in Zug, Switzerland.

Among these co-founders, the most prominent figure is Russian-Canadian Vitalik Buterin. He gained widespread recognition as the author of the original white paper outlining Ethereum’s concept back in 2013 and has continued his dedicated efforts to enhance the platform ever since. Before Ethereum, Buterin was involved in co-founding and contributing to the Bitcoin Magazine news website.

Another key co-founder is Gavin Wood, hailing from Britain. Wood’s contributions to Ethereum are equally significant, as he coded the initial technical implementation of the platform using the C++ programming language. Additionally, he played a crucial role in introducing Solidity, the native programming language of Ethereum, and served as the first chief technology officer of the Ethereum Foundation. Prior to Ethereum, Wood served as a research scientist at Microsoft and later went on to establish the Web3 Foundation.

Ethereum has a diverse group of co-founders, each contributing significantly to its inception and early development. These notable co-founders include:

• Anthony Di Iorio played a crucial role in financially supporting the project during its initial stages of development.
• Charles Hoskinson took on a pivotal role in establishing the Ethereum Foundation based in Switzerland and creating the necessary legal framework for the project.
• Mihai Alisie provided valuable assistance in the establishment of the Ethereum Foundation.
• Joseph Lubin, a Canadian entrepreneur, who, along with Di Iorio, provided essential funding during Ethereum’s early days. Later, Lubin went on to establish ConsenSys, an incubator dedicated to supporting startups built on the Ethereum platform.
• Amir Chetrit contributed to the co-founding of Ethereum but eventually stepped away from the project during its early development phase.

Ether price 

The inception of Ethereum’s native token, ether, took place in August 2014, when it was introduced through an initial coin offering (ICO). During this event, approximately 50 million ETHs were sold at $0.31 per coin, generating substantial funding of over $16 million for the project’s development.

Unlike many other cryptocurrencies, Ethereum’s digital currency boasts an unlimited supply, setting it apart with its continuous potential for circulation.

According to information available on the official project website, the annual inflation rate of ether stands at approximately 4.5%. Throughout Ethereum’s history, there have been two occasions when block rewards were reduced since the mining of the very first Ethereum block, famously known as the Genesis block. Notably, these reductions in block rewards are not hardcoded into Ethereum’s protocol, as is the case with Bitcoin’s halving events. Instead, the Ethereum community actively contributes through proposals known as “Ethereum Improvement Proposals” or EIPs, and the collective community votes to decide whether to incorporate these proposals into Ethereum’s software updates. Here is a breakdown of the issuance schedule for ether up to the present:

• Block 0 to Block 4,369,999: 5 ether
• Block 4,370,000 to 7,280,000: 3 ether (changed via EIP-649)
• Block 7,280,000 to now: 2 Ether (changed via EIP-1234)

The “difficulty bomb” is a feature that significantly impacts the issuance rate on the original Ethereum blockchain (before it transitions to the proof-of-stake Ethereum 2.0 blockchain). This mechanism increases the mining difficulty, leading to longer block discovery times for miners. Consequently, this reduces the amount of ether entering circulation as block rewards, thereby moderating the overall issuance of the cryptocurrency. The “difficulty bomb” has been activated, reset, and delayed multiple times between 2017 and 2020, primarily to allow Ethereum developers more time to focus on essential updates before the transition to Ethereum 2.0.

From its official launch in 2014 until March 2017, the price of ether remained relatively stable, fluctuating between $0.70 and $21. However, with the onset of the bullish cryptocurrency market in May 2017, the price of ETH surged above $100 for the first time. The momentum continued, and in June 2017, ether reached its peak at $414 before experiencing a correction. It took another five months for the bullish trend to regain strength. During this period, the entire crypto market witnessed significant buying pressure, pushing almost every cryptocurrency token to new record highs. By January 2018, ETH’s price reached an all-time high of $1,418, only to experience a sharp decline afterward.

It took nearly three years for the second-largest cryptocurrency (after Bitcoin) to retest its previous all-time high price. Between February and May 2021, the ether price more than tripled, reaching a new all-time high of $4,379.

In 2022, the cost of Ethereum reached $1,599. According to Coinmarketcap data,

ETH’s price is currently $3,918.41.

How does Ethereum work

The Ethereum blockchain stands as a decentralized and open-source platform designed to enable the seamless execution of smart contracts. These smart contracts are self-executing agreements with their terms directly encoded into the blockchain’s code. Ether (ETH) serves as Ethereum’s native cryptocurrency.

Ethereum’s blockchain has a chain of linked blocks, with each block holding many transactions. Every trade is a sign of how the Ethereum network is doing, including when people send ETH to each other or when they use smart contracts.In earlier times, the job of checking and approving transactions and collecting them into chunks was done by miners using mining. Validators handle this now.

To ensure the integrity and reliability of the Ethereum network, consensus is crucial. This means that a majority of nodes (computers within the Ethereum network) must agree on the current state of the network at any given moment. This consensus mechanism plays a crucial role in preventing double-spending, a potential issue where a user could attempt to spend the same cryptocurrency more than once, thereby safeguarding the network’s overall security.

Ethereum distinguishes itself from Bitcoin through its unique concept of accounts. While Bitcoin operates based on unspent transaction outputs, representing chunks of Bitcoin sent but not yet spent, Ethereum adopts a more conventional accounting system with distinct accounts and balances. There are two types of Ethereum accounts: externally owned accounts, controlled by private keys, and contract accounts, governed by their contract code.

The programmable nature of Ethereum allows developers to create and execute decentralized applications, known as dApps. They are powered by smart contracts, enabling the automatic execution of agreements without the need for intermediaries. This opens the door to a wide range of applications, such as decentralized finance (DeFi), supply chain management, and many others.

Initially, Ethereum operated on a proof-of-work consensus mechanism, similar to Bitcoin. However, with the completion of the Ethereum Merge, it has transitioned to a proof-of-stake mechanism. In this model, validators are chosen based on the amount of ETH they are willing to “stake” as collateral. This shift aims to enhance the scalability and energy efficiency of the Ethereum network.

Validators under the proof-of-stake mechanism must “stake” a minimum of 32 ETH to participate in the block validation process and secure the Ethereum network. These funds are locked into a smart contract. The more ETH a validator stakes, the higher the likelihood of being selected to propose a new block of data transactions for confirmation on the blockchain. Successful validators are rewarded when their proposed block is approved by other validators.

The dynamic Ethereum network remains in a constant state of evolution, driven by the collaborative efforts of its community. Among the recent enhancements is the groundbreaking Shanghai upgrade, which brought forth staked ETH withdrawals and a series of Ethereum Improvement Proposals (EIPs) meticulously crafted to streamline gas fees, ultimately benefiting developers utilizing the platform.

What Makes Ethereum Unique?

Ethereum has been at the forefront of revolutionizing blockchain technology with its pioneering smart contract platform. Smart contracts are automated computer programs that facilitate the execution of agreements between multiple parties over the Internet. By reducing the reliance on trusted intermediaries, they effectively lower transaction costs while enhancing transaction reliability.

Ethereum’s groundbreaking innovation lies in its ability to execute smart contracts using the blockchain, which further enhances the advantages of this technology. Co-founder Gavin Wood envisioned the Ethereum blockchain as “one computer for the entire planet,” enabling any program to gain robustness, censorship resistance, and heightened fraud protection by operating on a globally distributed network of public  nodes.

Beyond smart contracts, Ethereum’s blockchain can host a variety of other cryptocurrencies known as “tokens” through its ERC-20 compatibility standard. This functionality has led to an abundance of ERC-20-compliant tokens being launched on the Ethereum platform, with over 280,000 tokens created to date. Indeed, a significant number of these tokens hold positions in the best 100 cryptos based on their market capitalization, with notable examples like USDT, BNB, and LINK. The surge in interest in the ETH to PHP price can be attributed to the growing popularity of Play2Earn games in the ecosystem.

What is Ethereum Name Service?

Ethereum Name Service, or ENS, represents a distributed and highly adaptable naming system built on the Ethereum blockchain. Essentially, it serves as the Web3 equivalent of the traditional DNS (domain name service).

Typically, cryptocurrency addresses are lengthy combinations of numbers and letters, intended for computer interpretation. These addresses might look like “0xDC25EF3F5B8A186998338A2ADA83795FBA2D695E,” leading to confusion and even the potential loss of funds.

ENS helps fix this problem by giving clear names to machine codes, like Ethereum addresses, details, other crypto addresses, and content hashes. Using ENS, the complicated address talked about before can be turned into something easy like “Alice.eth,” helping you get different cryptocurrencies or NFTs with your own ENS name.

The base of ENS depends on two Ethereum smart deals. The first deal called the ENS list, keeps important details like the domain’s holder, the domain’s guide, and the time for keeping all records under the domain. The second deal is a Resolver which helps in changing readab͏le names into machine addresses.

Also, it’s important to see that ENS goes more than just mixing with . eth names. It also helps with the most common DNS names, like . com, . org, . io, . app, and numerous others.

What is an Ethereum Killer?

Throughout its existence, Ethereum has consistently held its position as the second-largest cryptocurrency by market capitalization. However, like any other blockchain network, Ethereum is not without its imperfections. Notably, the legacy blockchain suffers from high gas fees and relatively low throughput, processing only 15 to 30 transactions per second.

Although Ethereum has plans to address these shortcomings through various upgrades, its competitors have taken advantage of this opportunity to offer crypto users cheaper and faster transactions.

The concept of “Ethereum Killer” first gained traction during the 2016/2017 period with the emergence of alternative blockchains like Cardano in the cryptocurrency market. In 2018, EOS garnered significant attention as the next potential “Ethereum killer,” raising a staggering $4.1 billion from investors, the highest amount ever generated by an ICO. Since then, other contenders like Tezos, Solana, Fantom, Avalanche, and Binance Smart Chain have also emerged as possible threats to Ethereum’s dominance.

Each of these rival blockchains employs different consensus models to address Ethereum’s limitations caused by proof-of-work (PoW). For instance, Solana utilizes proof-of-history (PoH), while Binance Smart Chain employs a combination of proof-of-authority (PoA) and delegated proof-of-stake (DPoS).

Despite the emergence of these alternatives, none of them managed to deprive Ethereum of its status as the largest cryptocurrency by market capitalization. Additionally, Ethereum maintains its position as the leading blockchain for NFT trading activities.

What Is EIP-1559?

The EIP-1559 upgrade brings about a revolutionary change in the estimation of gas fees on the Ethereum blockchain. Prior to this upgrade, users had to engage in an open auction, known as a “first-price auction,” where the highest bidder would have their transaction prioritized by a miner.

With EIP-1559, this process is automated through a bidding system, and a fixed “base fee” is established for transactions to be included in the next block. The base fee dynamically adjusts depending on the network’s congestion level. Additionally, users who desire faster transaction processing can offer a “priority fee” to incentivize miners.

Moreover, EIP-1559 introduces a fee-burning mechanism. A portion of every transaction fee (the base fee) is burned and permanently removed from circulation. This measure aims to reduce the circulating supply of Ether, potentially leading to an increase in the token’s value over time.

Notably, in less than two months since the implementation of the London upgrade, the Ethereum network has managed to burn over $1 billion worth of Ether, highlighting the importance of this fee-burning mechanism.

How Many Ethereum (ETH) Coins Are There In Circulation?

As of December 2024, there are 120 million Ethereum coins available. This chart shows the total number of coins available for buying, selling, or spending on the Ethereum system. It shows how much money is easy to trade and how many crypto coins are already being used in the market.

How Is the Ethereum Network Secured?

In 2022, Ethereum underwent a significant upgrade by transitioning from a proof-of-work (PoW) system to a proof-of-stake (PoS) system to secure its network. This change made the platform more secure.

Before the transition, Ethereum, like Bitcoin, relied on the PoW consensus mechanism, where miners competed to solve complex mathematical puzzles to validate transactions and create new blocks. While PoW has proven effective in securing networks, it has some drawbacks, including high energy consumption and the potential for centralization of mining power.

With the implementation of the proof-of-stake model through the Ethereum 2.0 upgrade, the network’s security approach shifted. Instead of miners, the new system involves validators who are chosen to create new blocks and validate transactions based on the amount of Ether (ETH) they “stake” as collateral.

In the PoS model, validators are incentivized to act honestly, as they can lose their staked Ether in case of malicious behavior. This consensus mechanism promotes decentralization and is more energy-efficient compared to PoW, as it does not require the same level of computational power for mining.

The change to proof-of-stake makes the Ethereum network more secure and reliable for using smart contracts and handling transactions.Validators help keep the network safe, and changing to PoS has been a big step in Ethereum’s growth as a top blockchain choice.

Where Can You Buy Ethereum (ETH)?

As the second-largest cryptocurrency, Ethereum enjoys widespread accessibility, making it easily purchasable and available as ETH trading pairs on numerous major crypto exchanges. Some of the most prominent markets facilitating Ethereum transactions are:

• Binance
• Bybit
• OKХ
• Kraken
• KuCoin
• Bitfinex
• HTX, etc.

A variety of popular ETH price pairs can be found on these exchanges, including ETH/AUD, ETH/GBP, ETH/USD, and ETH/JPY, providing traders and investors with diverse options for trading and investing in Ethereum.

Ether and gas

Ether (ETH) and gas are two essential concepts in the Ethereum blockchain ecosystem.

Ether (ETH):

Ether is the native cryptocurrency of the Ethereum blockchain. It serves as the primary means of value transfer within the network. Users can hold, send, and receive Ether, similar to how Bitcoin functions in the Bitcoin blockchain.

Beyond its use as a digital currency, Ether plays a more significant role in the Ethereum ecosystem. It acts as the “fuel” or currency required to perform various operations on the platform.

Gas:

Gas is a unit of measurement used to quantify the computational work required to execute specific actions on the Ethereum network.

In Ethereum, every operation, such as executing a transaction, deploying a smart contract, or interacting with a decentralized application, requires a certain amount of computational resources to be processed.

These computational resources are represented in gas units, and each operation has an associated gas cost, which indicates how much gas is required to complete that particular task.

Gas is crucial for preventing abuse and ensuring that the Ethereum network remains secure and efficient. It acts as a pricing mechanism, incentivizing users to prioritize essential transactions by attaching higher gas fees and discouraging spam or resource-intensive operations.

When people use the Ethereum computer system, like sending money or playing apps, they have to pay for the computer’s work they use.This payment is made with gas, and the cost of the work depends on how much gas is used (gas cost) and the gas price in Ether.

In summary, Ether is the native cryptocurrency of the Ethereum blockchain, while gas is the unit of measurement used to calculate the computational resources required to execute actions on the network. Gas is paid in Ether and acts as a critical mechanism to ensure the efficient and secure operation of the Ethereum ecosystem.

Smart contracts

Smart contracts can be coded using various high-level programming languages like C++ and JavaScript, but the most widely adopted one is “Solidity,” developed by Gavin Wood, a co-founder of Ethereum and the project’s first chief technology officer.

Convert high-level language contracts into low-level language for machines to understand.This change is needed because smart contracts run on the “Ethereum Virtual Machine.”The EVM is found in all full Ethereum nodes and can run more than 140 different types of commands.These codes are like simple commands that can be joined to do almost any job, making the EVM “Turing-complete.”

These codes are basic commands that can be linked to perform almost any task, making the EVM “Turing-complete.”

The introduction of smart contracts has paved the way for the emergence of decentralized autonomous organizations (DAOs) and a comprehensive decentralized finance ecosystem, known as “DeFi.” In this ecosystem, traditional financial services like lending and insurance provision are accessible through peer-to-peer powered decentralized applications (dapps).

Ethereum token standards

Ethereum token standards are protocols or specifications that define the rules and functionalities for creating and interacting with tokens on the Ethereum blockchain. These standards ensure that all tokens developed on Ethereum adhere to a common set of rules, making them compatible with various applications, wallets, and exchanges within the Ethereum ecosystem. Some of the most popular Ethereum token standards are:

• ERC-20 (Ethereum Request for Comments 20): This is the most widely adopted token standard on the Ethereum blockchain. ERC-20 defines a set of standard functions that all tokens must implement, including functions for transferring tokens, getting token balances, and approving token spending.
• ERC-721 (Ethereum Request for Comments 721): This standard is used for NFTs. In contrast to ERC-20 tokens, every ERC-721 token possesses exclusivity, symbolizing a one-of-a-kind asset or item. NFTs have gained significant popularity for representing ownership of digital art, collectibles, virtual real estate, and more.
• ERC-1155 (Ethereum Request for Comments 1155): This standard allows for the creation of both fungible and non-fungible tokens within the same contract. It offers greater flexibility and efficiency in managing multiple token types and is widely used in gaming and decentralized finance (DeFi) applications.
• ERC-777 (Ethereum Request for Comments 777): This proposed standard improves upon ERC-20 by adding more advanced features, including the ability to send tokens with a callback function, making token transactions more secure and efficient.
• ERC-223 (Ethereum Request for Comments 223): Similar to ERC-777, ERC-223 aims to enhance ERC-20 by addressing some of its vulnerabilities, such as unintentional token losses during transactions.
• ERC-621 (Ethereum Request for Comments 621): This standard allows for the increase or decrease of a token’s total supply, making it useful for projects that may need to adjust token supply based on changing requirements.

These token standards provide developers with a set of guidelines and best practices for creating tokens on the Ethereum blockchain, enabling interoperability and ease of integration across various decentralized applications and services.

Ethereum 2.0

Ethereum 2.0, also known as “Serenity,” represents a significant upgrade with the ambitious goal of enhancing the speed, efficiency, and scalability of the world’s second-largest cryptocurrency network. This upgrade involves transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) system.

Termed “Casper,” Ethereum’s new PoS mechanism requires network participants to lock up their coins, becoming contributors to the network, instead of relying on resource-intensive mining equipment. Stakers are required to lock up 32 ethers individually or can opt to join staking pools, combining their ether with others to collectively participate in creating new blocks on the Ethereum PoS blockchain.

The Ethereum 2.0 upgrade is being executed in several phases, each contributing to the overall transformation of the network:

Phase 0 involves the launch of the Beacon chain and the activation of the proof-of-stake mechanism.

Phase 1 aims to merge the old and new Ethereum blockchains, streamlining the network and its functionalities.

Phase 2 introduces “shard” chains and roll-up technology, further boosting scalability and performance.

Phase 3 focuses on implementing security improvements, ensuring the network’s resilience and protection against potential threats.

Through these progressive phases, Ethereum 2.0 seeks to revolutionize the Ethereum network, providing a more sustainable, secure, and efficient platform for its ever-growing user base.

Phase 0 of Ethereum 2.0 was launched in December 2020, introducing the Beacon chain as a separate Ethereum blockchain that implemented a proof-of-stake (PoS) system. The Beacon chain’s responsibilities encompass new block creation, transaction verification, staking rewards distribution, and the management of new Ethereum blockchains known as “shard chains.”

In the subsequent significant phase of development, the Beacon chain will be integrated with the main Ethereum network, effectively replacing the current energy-intensive proof-of-work (PoW) system with the more sustainable proof-of-stake model. Validators, the network stakeholders, will take on the role of producing blocks, verifying transactions, and ensuring the blockchain’s security, replacing the traditional miners.

More minor upgrades will be needed after the Ethereum and ETH 2.0 merge Work will move toward sharding support, making many small blockchains or shards The set of transactions will be verified on each shard itself thus making the whole network not check every single transaction. The main coordinator of this system will be the Beacon chain, randomly assigning validators to each shard.

The Ethereum developers expect to continue tightening the security of the network, particularly after getting PoS and sharding up and running. This means the real identities of validators responsible for block proposals are kept hidden through anonymity implementations. And soon, they will use advanced technologies like the Verifiable Delay Function (VDF) to improve how randomness is used to assign validators at each epoch, complicating any attempts by attackers to harm the network. These developments are meant to strengthen the existing Ethereum infrastructure, making it a more robust and high-performing blockchain.

The Ethereum Merge

In 2022, Ethereum made a significant shift in its consensus mechanism from proof-of-work to proof-of-stake, renaming the transition from Ethereum 2.0 to The Merge. The Merge was successfully implemented on Sept. 15, 2022, following the successful merge of the Goerli testnet on Aug. 11, 2022.

This transition brings about several critical changes to Ethereum. Firstly, it merges the existing proof-of-work Ethereum mainnet with the Beacon Chain, a proof-of-stake chain. The combined chains form the new proof-of-stake Ethereum, consisting of a consensus layer and an execution layer. The consensus layer synchronizes the chain state across the network, while the execution layer handles transactions and block production.

One major impact of The Merge is a substantial reduction in ETH issuance, often referred to as the “triple halving” in reference to the Bitcoin halving. This reduction amounts to 90% of ETH issuance. With over 14 million ETH already staked, the transition could potentially make ETH deflationary. Stakers are projected to earn between 8% and 12% APR. However, staked ETH will not be immediately withdrawable after The Merge; withdrawal is expected to be enabled after the Shanghai upgrade, estimated to take place 6 to 12 months later.

Despite the transition to proof-of-stake, The Merge does not result in an increase in transaction throughput or a reduction in gas fees, as the block production rate remains roughly the same. Additionally, on-chain governance is not enabled, and protocol changes are still discussed and decided off-chain through stakeholders.

One significant benefit of the transition to PoS is the expected reduction in Ethereum’s annual energy consumption. It is estimated to drop from 112 TWh/yr to just 0.01 TWh/yr, representing a 99.9% decrease. This “greener” Ethereum is anticipated to attract institutional investors. However, Ethereum miners, representing a $19 billion industry, are advocating for ETHPoW, a potential hard fork that would retain proof-of-work. 

Ethereum Shanghai Upgrade

The leading Ethereum upgrade after The Merge, the Shanghai Upgrade, includes: the ability for stakers to unstake their ETH as well be able to withdraw the rewards of their ETH without having it delayed still at Beacon Chain. The final step of the Ethereum Kill Chain is sixteen, The Merge – when the Ethereum proof-of-work chain merges with the proof-of-stake Beacon Chain, in which validators (for whom I might be a validator client one day) stake 32 ETH otherwise known as Beacoins to secure Layer 1. But until the Shanghai Upgrade, stakers struggled with unstaking and how to withdraw their funds.

The Shapella Upgrade, a hard fork that adopts five critical EIPs in its improvement proposals, and one of the more anticipated ones is EIP-4895 which deals with enabling withdrawals. With upgrades on the execution layer, and consensus, named Shanghai and Capella respectively.

On February 7, 2023, withdrawals were opened on the Zhejiang testnet and Sepolia testnet completed its hard-fork upgrade successfully on February 28. The hard fork was performed on the Goerli testnet first on March 15, 2023, which is intended to perform as a rehearsal for the mainnet upgrade that could happen in/around March 2023. The mainnet upgrade will unlock over 17.5 million ETH for withdrawal, representing an important step in the Pylon evergreen process and Ethereum history across years of continuity.