Ethereum is the first open-source blockchain that successfully implemented smart contracts in its ecosystem. Ethereum today supports thousands of projects and after Bitcoin, it is one of the most innovative and transformative approaches to decentralization in the modern world.
Ethereum is a decentralized platform that allows developers to develop and deploy dApps (decentralized applications). This gave rise to many innovations in the Blockchain area.
In late 2013, a computer programmer named Vitalik Buterin proposed and developed the Ethereum project. The Ethereum blockchain’s development was funded by an online crowdsale of the network’s cryptocurrency, Ether (ETH) in 2014. The first round of crowdsale raised over $18 million, and Ethereum was officially released on July 30, 2015.
In addition, Ethereum, like Bitcoin, employs a Proof-of-Work consensus mechanism that facilitates transactions via its native cryptocurrency Ether. Since the platform is open-source, anyone can build a dApp on the Ethereum network.
This review of Ethereum – ETH was created for informational purposes. This article is not intended for promotion.
Ethereum has opened portals to various businesseses to explore the world of blockchain. However, the network has its shortcomings which are expected to improve. So let us find out what we can expect from Ethereum in the forthcoming months.
There are many problems Ethereum faces. One of them is its high energy consumption, just like Bitcoin. However, this is expected to end with the rollout of Ethereum 2.0, where the protocol will be transitioning from proof-of-work – PoW to Proof-of-Stake – PoS consensus algorythm.
Recently Vitalik Buterin published an article, titled Endgame, in which he discussed different approaches to scaling Ethereum. Let’s find out the separate phases of the upgrades we need to watch out for and their impact on the Ethereum platform.
To understand the Merge, we need to understand the Beacon Chain. The beacon chain is a completely independent network with a Proof-of-Stake – PoS consensus layer. It runs parallel with the current Ethereum mainnet, where the consensus layer is still PoW. The Merge is nothing but when the current Ethereum PoW chain will Merge with the Beacon Chain.
The Beacon Chain started accepting deposits in November 2020. The network has a total value of 9 million locked up ETH, secured by 240k validators on the platform. This upgrade will make no changes to the data layer of the Ethereum network.
The Phase 1 upgrade has a target release date of Q2 2022. The Merge will assist Ethereum in aligning with the original vision laid out at its inception.
The Surge upgrade will increase Ethereum’s scalability through rollups. The transactions will be much cheaper after the upgrade. It will also maintain security on the blockchain while ensuring the fees remain low.
The Verge will be the transition from Merkle trees to Verkle trees. A Merkle Tree ensures blocks of data can be received from other peers in a peer-to-peer network. And for every transaction occurring on the blockchain network, there is a hash associated with it. Multiple chains integrate with Merkle roots in such a way that each chain acts as a unique blockchain. At the same time, it can share information and reach a consensus with the other chains in the network.
This is where all the data of the Ethereum blockchain is stored. The implementation of this upgrade should make blockchain validation easier.
The Purge will irradicate the need for nodes to store all the historical blockchain data permanently. Therefore, clients will not be required to store more than one-year-old history. This, in turn, will reduce the hardware requirements for nodes and reduce the network bandwidth.
The Splurge upgrade will include several miscellaneous upgrades, which will make Ethereum more accessible to an average user. What these updates are, are yet to be announced.
Sharding is a technology adopted from database management systems – DBMS. Thesewill be used to scale the Ethereum platform. DBMS sharding divides databases horizontally, usually across rows of tables, and distributes data storage responsibility among several nodes, reducing the requirement of processing and storage space of individual nodes.
Similarly, the Ethereum blockchain will be divided into several shards. These shards on the Ethereum network will act like independent blockchains, known as Shard Chains. In Ethereum 2.0, shard chains store state and process transactions. A randomly chosen validator oversees forming and proposing transaction blocks that a randomly chosen sharding committee will vote on.
If a proposed block receives enough votes, a ‘crosslink’ will be created between the shard block and the beacon chain, confirming that the shard block will be added to the beacon chain. It’s also worth noting that transactions are only executed and validated within a shard, and the state is only stored at the shard level.
The Phase 2 upgrade has been targeted to release in the year 2023. According to the official Ethereum website, there will be 64 shard chains to spread the Ethereum network load to allow the various transaction to run smoothly.
On January 24, 2022, the Ethereum Foundation announced that it would change terminologies such as ETH 1.0 and ETH 2.0 to more preferred ones like the execution and consensus layers.
According to Statista, Ethereum miners made nearly 15 percent more revenue in October 2021 when compared to the previous month – although figures were still lower than in May 2021. That particular month, miners earned record revenue of more than 2.3 million U.S. dollars, likely due to Ethereum’s role within the boom of Decentralized Finance and NFTs.
Projects like ConsenSys have teamed up with a field data management firm called Amalto to create a platform that can automate ticket-based order-to-cash processes in the gas and oil industry. This brings Ethereum to the center of revolutionization in the oil and gas sector. It has also started leaving its mark in the banking sector. Banks such as BNP Paribas have experimented with Ethereum to create their own blockchain project.
Ethereum has been spreading its wings in various sectors of business. In the crypto environment itself, there are thousands of ways in which Ethereum is being used on a daily basis. As the market matures, we may see more use of Ethereum in different parts of the world.
Ethereum is the most widely used cryptocurrency in the world, after Bitcoin. It is also the largest blockchain network for dApps. It is the second-largest cryptocurrency by market capitalization. It has just been a few years since the launch of Ethereum, but we saw many companies such as Ubisoft, ING, TD Ameritrade, etc., building on the platform.
There has been an increase in the on-chain transactions, value settled, and transactions fees generated, proving that the use of Ethereum has spiraled significantly over the years. One more reason for this is the undeniable fact that Ethereum was first before its alternatives like Solana, Polkadot, Tezos, and Avalanche, who are superior to Ethereum in many terms.
The promise of the launch of Ethereum 2.0 or the consensus layer has drawn global attention. This can definitely make Ethereum environment friendly, but scalability is what will finally prove Ethereum’s true potential. It is also note worthy that JP Morgan had stated blockchain working groups such as Enterprise Ethereum Alliance can help in identifying strategic partnership opportunities for blockchain applications inside and outside the organizations.
In my opinion, the high network fees have hindered the platform’s growth for some time now. However, I am optimistic about Ethereum in the future of blockchain technology. The year 2022 might change the dynamics for Ethereum, but that is yet to be achieved.
The crypto itself is in the adoption stages in the global market. However, Ethereum has come a long way since its inception. As more companies explore blockchain technology, we may see Ethereum scaling to new heights.
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