No doubt that many of you have heard about this ‘crypto/token’
In the crypto world – many refer to Bitcoin as 1.0, Ethereum as 2.0 and some newer crypto’s as 3.0’s
This is from Wiki:
Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. It supports a modified version of Nakamoto consensus via transaction based state transitions.
Ether is a cryptocurrency whose blockchain is generated by the Ethereum platform. Ether can be transferred between accounts and used to compensate participant mining nodes for computations performed. Ethereum provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. “Gas”, an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network.
Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale that took place between July and August 2014. The system went live on 30 July 2015, with 11.9 million coins “premined” for the crowdsale. This accounts for approximately 13 percent of the total circulating supply.
In 2016, as a result of the collapse of The DAO project, Ethereum was split into two separate blockchains – the new separate version became Ethereum (ETH), and the original continued as Ethereum Classic (ETC). The value of the Ethereum currency grew over 13,000 percent in 2017.
Ethereum also became very popular because of it’s ease of hosting ICO’s (Initial Coin Offerings) on their platform, they are usually referred to as dApps (Decentralized Applications).
Features of Dapps:
- Open Source. Ideally, it should be governed by autonomy and all changes must be decided by the consensus, or a majority, of its users. Its code base should be available for scrutiny.
- Decentralized. All records of the application’s operation must be stored on a public and decentralized blockchain to avoid pitfalls of centralization.
- Incentivized. Validators of the blockchain should be incentivized by rewarding them accordingly with cryptographic tokens.
If we adhere to the above definition, the first Dapp was in fact Bitcoin itself. Bitcoin is an implemented blockchain solution that arose from problems revolving around centralization and censorship. One can say Bitcoin is a self-sustaining public ledger that allows efficient transactions without intermediaries and centralized authorities.
I can definitely say that sending Ether (using GAS) is cheap and fast. A whole lot faster than Bitcoin (for the moment). There have been some issues with Ethereum – scaling (sharding) is being worked on at the moment. Ethereum is also to get zk-Snarks and Ring signatures (like Monero – total privacy)
Proof-of-Work
Most blockchains run on ‘proof-of-work’ which means that miners solve cryptographic puzzles to mine a block to the blockchain. These puzzles get harder over time and requires a lot of energy and computing power.
The problem with ‘proof-of-work’ is that it’s becoming more and more centralized. This means that a few mining companies control the hashrate of Bitcoin. As of right now, 71.2% of the hashrate is controlled by five mining pools.
As the cryptographic puzzles become more challenging, it requires more hardware and energy which is also very expensive. This makes it harder for anyone to mine, which further centralizes to a few mining pools.
Why is this bad? If these five mining pools coordinated, they can unleash a 51% attack. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between users. An event like this could possibly even legitimize a different blockchain such as Bitcoin Cash.
Proof of Stake
Ethereum’s solution to this is to move towards ‘proof-of-stake’. This means that validators (instead of miners) will have to put up Ether as a stake and then ‘validate’ blocks by placing a bet on it. If the block gets appended, you will get a reward proportional to your stake. If you bet on the wrong block, your stake will be taken away.
Proof-of-stake also helps solves some of the problems with proof-of-work. It helps achieve decentralization, energy efficiency, and helps Ethereum scale.
Casper
Similarly, there will be stakers who “stake” their coins by locking them down in special wallets. These stakers will be rewarded through an annual dividend of ether. So, the more ETH you stake, the larger your dividends will be.
In PoS, no matters what happens, you will always win and have nothing to lose. The only way to lose your stake is if you maliciously validate wrong blocks.
Casper moves towards a “proof of stake” consensus which prevents a 51% attack from ever happening. Temporary and sustained 51% attacks hold key implications for Ethereum’s future. Casper secures it further.
Transaction Chart
There have been lots of phishing attempts on addresses. Please, please, please do not fall for these. Always double-check the address and bookmark it. Google has recently stopped crypto searches and there are more and more scam addresses popping up. Binance was also the victim of a highly orchestrated hack that was caught before it could be executed. Binance have put out a $250,000 bounty that leads to arrests of anyone involved.
I would also recommend an app called Cryptonite that l’m using in Chrome.
This extension protects you from phishing sites. The MetaCert shield turns green when you visit certified Cryptocurrency websites.
The green padlock is meaningless because SSL certs are free and automatically issued to phishing sites.
Here is one of my Ether wallets (nothing in it) if you want to search it in etherscan and have a play around. Public address is :
0xe1d6D1fC5fbb8D86C9097226088977446056C79A
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