Introduction to Cryptocurrency: ETH, the Leader after BTC
Written by the CoinEx Institution, this series of jocular and easy to understand articles will show you everything you need to know about major cryptocurrencies, making you fully prepared before jumping into crypto!
Today we’re going to talk about ETH. Our introduction needs to start with Ethereum, the platform of its origin.
As we all know, the world-renowned Ethereum is an open source public blockchain platform with smart contract functions. This platform provides a decentralized virtual machine to process peer-to-peer contracts through its dedicated cryptocurrency, ETH.
Ethereum was originally proposed by a person named Vitalik Buterin. Vitalik is a programmer in the BTC community. One day he proposed to BTC core developers: the BTC platform should have a more complete programming language for people to develop programs, but this proposal was not approved. So Vitalik decided to do it alone.
At the time, Vitalik thought that many programs could go further in the Bitcoin-like principles, so he made up his mind to develop a new platform. One day in 2013, he wrote the “Ethereum White Paper,” which put forward the concept of Ethereum: “a next-generation cryptocurrency and decentralized application platform.” In 2014, he raised funds through ICO, and investors also bought ETH for BTC from the foundation.
The Ethereum program was originally developed by Ethereum Switzerland GmbH, a Swiss company, and then was transferred to the Ethereum Foundation, a non-profit organization.
In its infancy of development, the Ethereum platform was praised by some for its technological innovation, but was also questioned by some others for its security and scalability.
Here we cannot skip the king of all cryptocurrencies — BTC. BTC has pioneered the decentralized cryptocurrency and fully tested the feasibility and security of blockchain technology in more than five years.
But BTC is not the perfect leader. One of the shortcomings lies in the scalability of its protocol. For example, there is only one symbol in the Bitcoin network — BTC. Users cannot customize other symbols, which deprives it of some functions. In addition, the BTC protocol applies a set of stack-based scripting languages, which, despite the flexibility to enable functions such as multi-signature, is not enough to build more advanced applications, such as decentralized exchanges. Such problems also catalyzed the birth of Ethereum — which was designed to solve the insufficient scalability of BTC.
In 2016, Ethereum technology was recognized by the market, and its price started to skyrocket. It was known as the “second-generation blockchain platform”, and was also recognized by some people as the “BTC2.0”. Ethereum technology has also attracted a large number of people other than developers. The most well-known of them is the Enterprise Ethereum Alliance, a vast network established by more than 20 of the world’s top financial institutions and technology companies, e.g. JP Morgan, the Chicago Board of Trade, New York Mellon Bank, Thomson Reuters, Microsoft, Intel, and Accenture, in early 2017. The cryptocurrency ETH created by Ethereum has also become the sought-after asset after BTC and the darling of many digital currency exchanges. CoinEx, a world-renowned digital currency exchange, also supports ETH trading.
Compared to most other cryptocurrencies or blockchain technologies, Ethereum is characterized in the following ways:
Smart contract: The program stored on the blockchain is run by each node. The person who runs the program needs to pay a transaction fee to the miner or stakeholder of the node;
Tokens: Smart contracts can create tokens for distributed applications. The tokenization of distributed applications puts the interests of users, investors and managers in the same boat, and tokens can also be used for the ICO.
Uncle block: Merge the shorter blockchain that was not included in the parent chain in time due to the slow speed, to increase the transaction volume;
Proof of Stake: Compared with the Proof of Work, it is more efficient, and can save a lot of computer resources wasted during mining and avoid network centralization caused by special application integrated circuits;
Distributed applications: Distributed applications on Ethereum do not stop and cannot be shut down. As a relatively new development project using Bitcoin technology, Ethereum is committed to implementing a globally decentralized, un-ownable, digital computer for executing peer-to-peer contracts. Simply put, Ethereum is a world computer that you can’t turn off.
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