What do Blockchain and Decentralization mean?
Most of us have heard of bitcoin at least once in our lifetime. the Best decentralized money at the moment is Bitcoin. Bitcoin ecosystem is the pioneer of decentralized systems in the world. Decentralized means there is no owner to the system, and its users own it.
As we know now, bitcoin is a decentralized money system. So now we know decentralization, Decentralization will be good for many systems like,
- The voting system
- Real estate transfer records
- Social media platforms
The blockchain is a byproduct of bitcoin’s invention. Blockchain was created using existing technologies like cryptography, proof of work, and decentralized network architecture together. Blockchain can make decisions without a central authority. Before bitcoin, there wasn’t a thing called a blockchain. When it comes to life with bitcoin, people named it blockchain. Bitcoin runs on top of blockchain just like everything online is running on top of the internet. So many new decentralized applications can run on blockchain because it is advanced and highly scalable. Bitcoin is one use case of blockchain.
Once People started to learn more about bitcoin and blockchain. To be more decentralized, blockchain should have an extensive network with many individual computers working as nodes.
Bitcoin is Turing incomplete, which means that Bitcoin’s scripting language is intentionally designed to minimize the complexity. But to build a compelling, complex network, they needed a new programming language that is Turing complete and a different set of computers to run as nodes for the system.
“Turing Complete refers to a machine that, given enough time and memory along with the necessary instructions, can solve any computational problem, no matter how complex.”
What is Ethereum?
So as a solution, Vitalik Buterin proposed a system called Ethereum in 2013. It went live in 2014. Ethereum is a DIY(Do-it-yourself) platform for decentralized applications(DApps). To use the Ethereum network and build apps on top of it, you need to learn a new computer language called Solidity.
Ethereum network has thousands of computers as its nodes. Because of that, it’s fully decentralized. Most importantly, Ethereum is not a currency like bitcoin. It’s an entire ecosystem or a platform.
Massive companies like Amazon, Facebook, Google, Uber, and Netflix are ruling most of the internet without us knowing it.
What can Ethereum do?
Ethereum’s’ goal is to build a fully decentralized internet because using the Ethereum platform that can happen, so people can directly connect with other people without needing a central authority.
- If people can directly rent hard drives from other people, there won’t be a need for a service like dropbox or google drive.
- If the drivers can connect with passengers and find their ride, there won’t be a need for uber service.
So to do this, Ethereum uses a system called smart contracts. A smart contract is an agreement that can execute certain functions without human intervention. Ethereum smart contracts are live on the blockchain and execute when a transaction occurred.
Ethereum has its token called Ether which gives a liquidity layer to allow exchanges to happen in the Ethereum network. Ether provides a mechanism for paying and earning transaction fees for supporting and using the system.
Ethers’ price has increased in the last few months from 300$ to 2000$, which happened because people see the Ethereum Platform’s potential.
Big companies and influential people join the Ethereum ecosystem, and some choose Ethereum over bitcoin. Many companies use Ethereum and blockchain technology to update and develop their applications.
Scalability of Ethereum
The scalability of Ethereum was a question for many years because of the proof of work mechanism. The proof-of-work protocol, known as Ethash, requires miners to go through an intense trial and error race to find a block’s nonce. Only blocks that are with a valid nonce can be added to the Ethereum blockchain.
Because of that, Ethereum 2.0 phase 0 was initiated on the 1st of Dec of 2020. This 2.0 version uses a proof of stake mechanism, and it’s widely scalable than the Proof of Work mechanism. A stake mechanism is a fixed amount ‘committed’ to a validator’s blockchain to participate in block creation and attestation. On Ethereum 2.0, network validators will stake 32 ETH to the network, and the system will reward them in ETH for their effort. If an ETH holder does not have at least 32 ETH, they have to use a staking pool to get into Ethereum 2.0. Validators who break the rules of the network will be penalized.
These are the most basic things that you need to know before investing in Ethereum. Do your own research and be comfortable with Ethereum before putting any of your hard-earned money because Ethereum is still highly volatile.
Buy Ethereum On Binance.