A SUMMARY OF ETHEREUM WHITEPAPER
Ethereum is a great next cryptocurrency to examine and understand. Funny thing is, Ethereum does own its own cryptocurrency referred to as Ether, but Ethereum itself is a open-source software that encourages decentralized apps to be built on it. Ethereum provides the stage and coding needed for others to build and function.
We take a look at the original whitepaper published back in 2014 by Vitalik Buterin, and notice how it starts with a history of Bitcoin and earlier concepts such as Wei Dai’s b-money introduced back in 1998 or even Adam Back’s hashcash. Noticeably Bitcoin built upon these ideas and more to create a system around the idea of proof-of-work. At the time was a breakthrough, but now is archaic and outdated. Since then, blockchains such as Ethereum have improved upon the blockchain technology with the use of proof-of-stake. Another blog shall be released closely comparing the two.
Honestly, the combined concepts introduced by Bitcoin at the time were impressive. A beginning to a new era of digital currency. Ethereum set out with the mission of improving upon the technology of Bitcoin and focusing on some of its drawbacks such as weak smart contracts, computational energy, and the inclusion of decentralized apps.
ETHEREUM
We are first introduced to an Ethereum account, in which direct transfers of value and information take place. Each account contains four fields which include the nonce a counter implemented to make sure each transaction is only carried out once, the account’s current ether balance, a contract code if present, and the account’s storage (empty by default).
There are two kinds of accounts on the Ethereum network including externally owned accounts (used with private keys) and contract accounts (used with contract codes). The term “transaction” is used in Ethereum to refer to the signed data package that stores a message to be sent from an externally owned account. Whereas a message is a virtual object that are never serialized and exist only in the Ethereum execution environment.
Interesting to note is that all transactions on the Ethereum network are executed with Ether; it’s own internal crypto. As a living and growing ecosystem it encourages other applications, blockchains, and ecosystems to interact and transact on the Ethereum network. In turn, these other players might work on other cryptocurrency as well and might need to conduct an exchange or trade.
Take a quick look at the contained fields for first accounts and then for messages and transactions respectively:
APPLICATION TYPES
Ethereum claims to have in general three types of applications one heavy in financial applications dealing with contracts for managing money including sub-currencies, financial derivatives, wallets, and wills. Another being semi-financial, in which one side is heavy non-monetary, and lastly non-financial applications such as governance.
Ethereum is an all-in-one blockchain sporting its own currency, allowing easy communication between other applications, and the ability for applications and software to be built on the Ethereum network. A system in place where security and governance is maintained. An ecosystem in which each transaction is met with a transaction and gas fee.
Interestingly, for scalability it calls attention to issues Ethereum would face as the number of transactions increased on top of the amount of applications being built on blockchain as well. Today in 2022 we see those issues come alive. Not necessarily a bad issue as it does point to growth.
Some current use cases for Ethereum include:
Decentralized apps (dApps): Ethereum provides a platform for building decentralized applications (dApps) that run on a blockchain network, allowing for secure and transparent execution of smart contracts and other code.
Tokenization: Ethereum allows for the creation and issuance of digital tokens, which can be used for a wide range of applications such as digital assets, NFTs, and more.
DeFi (Decentralized finance): Ethereum is the backbone of many decentralized finance (DeFi) platforms, which offer a wide range of financial services such as lending, borrowing, and trading without the need for intermediaries.
Some potential future use cases for Ethereum include:
Increased use in enterprise and institutional applications: Ethereum’s ability to support complex smart contracts and decentralized applications could make it an attractive option for businesses and organizations looking to leverage blockchain technology.
Improved scalability: Ethereum is currently working on several solutions to improve its scalability and reduce the cost of transactions, which could open the door to new use cases such as micropayments and real-time financial applications.
Interoperability: Ethereum’s ability to communicate and interact with other blockchain networks could enable new use cases such as cross-chain transactions and decentralized marketplaces.
Ethereum’s blockchain technology could be used for various use cases like supply chain management, voting systems, and more.
Let’s continue with a summary of Litecoin.
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