Ethereum, Ethereum Classic and Ethereum Merge Explained

Ethereum has a reputation for being in the headlines for various reasons. From the smart contracts and programming update to its blockchain in 2016, to the famous merge in 2022. It holds its position as the second most popular cryptocurrency in the world after Bitcoin. However, not all news has an optimistic ground for Ethereum.

After the recent bloodbath in the crypto market, Ethereum has plummeted by over 73% from its all-time high of $4,891.70. As of writing this, it stands at $1,310.43 per ETH. So far, ETH has started the year 2023 on a positive note. The altcoin has risen by almost 8% in the last 7 days and 3.71% in the last 24 hours.

What is Ethereum

Ethereum is an open-source, decentralized, blockchain and cryptocurrency platform, that runs based on smart contracts. 

The idea of Ethereum was first proposed in 2013 by Vitalik Buterin, a Russian-Canadian programmer and cryptocurrency researcher. After undergoing several developments for over three years, it was launched in July 2015. Ethereum is not a cryptocurrency but a platform which can be used to create decentralized applications (dApps), automate and streamline supply-chain processes, verification and management of identities, gaming and many more.

Smart Contracts In Ethereum:

Smart contracts, are pieces of code that execute automatically when certain conditions are met. In other words, they are used to securely automate agreements or transactions between parties. So that transparency could be established and the whole process can be done more efficiently. They are also used to deploy various decentralized apps or dApps. 

What are dApps

They are decentralized apps that are built and run on a decentralized network, such as a Blockchain. In general, decentralized apps are different from traditional apps in terms of ownership and control. Traditional apps are owned and maintained by a single entity, such as a  centralized company. dApps on the other hand, are not maintained by any single entity.

Ethereum dApps are developed and maintained by the Ethereum platform.

Ethereum network and blockchain are used to run these apps. They are developed using languages specifically designed for Ethereum such as Solidity, Vyper and Serpent. Two popular use cases of dApps are Defi and NFT.

 EVM (Ethereum Virtual Machine)

The developed apps are deployed on EVM (Ethereum virtual machine). EVM is the runtime environment for smart contracts in the Ethereum network. Its primary function is to execute the bytecode instructions stored in a smart contract.

Deployed smart contracts in Ethereum are stored in EVM as bytecodes. Whenever a transaction involves a smart contract, EVM retrieves the bytecode and executes any instructions present in the smart contract. This can be a transfer of ownership of assets from one party to another or updating an account credentials.

What is Ethereum Blockchain

It is a distributed decentralized public ledger and the underlying technology that powers Ethereum. The Ethereum blockchain is maintained by Nodes, a group of computers that run the Ethereum software and carry out validation and process of transactions. The nodes together make sure the blockchain is secure and the transactions are carried out in a transparent and verifiable manner.

Difference Between Ethereum and Ether

Ethereum is a platform that facilitates transactions and dApps building using smart contracts. Ether (ETH), on the other hand, is the native cryptocurrency of the Ethereum platform. It is used to facilitate transactions and pay fees to the nodes that process transactions and run smart contracts. ETH is a form of payment for services on the Ethereum network.

Bitcoin vs Ethereum

1. Creators:

Bitcoin was created by an individual or a group of individuals under the name of Satoshi Nakamoto, Ethereum was developed by a Russian-Canadian programmer Vitalik Buterin.

2. Currency vs Platform:

Bitcoin is a digital cryptocurrency, an alternative to fiat currency. It can be understood as a digital equivalent of gold, to store value. Ethereum is not a cryptocurrency, it is an open-source, decentralized blockchain platform. Ether is its native cryptocurrency.

3. Consensus Algorithm:

Bitcoin has Proof-of-work (POW) consensus, while Ethereum switched to Proof-of-stakes (POS) consensus.

4. Time Taken to add a Block to the Blockchain:

In the case of Bitcoins, it takes approximately 10 minutes on average. Ethereum is way faster in this case, taking only 15 seconds on average.

5. Transaction Capacity:

Bitcoin has a transaction capacity of on average 7 transactions per second. While Ethereum can carry out 30 transactions per second.

6. Supply:

Bitcoin has a finite supply of 21 million bitcoin. Ethereum has an infinite supply cap.

7. BTC vs ETH:

BTC is the Bitcoin cryptocurrency meant to trade on the bitcoin blockchain. ETH is the Ethereum cryptocurrency meant to trade on the Ethereum blockchain.

Ethereum classic and the difference between Ethereum and Ethereum Classic

In 2016, a smart contract operating on the Ethereum network, known as the DAO, was hacked. As a result, $50 million was stolen. In response to this, the Ethereum community decided to hard-fork the Ethereum blockchain, freeze the stolen funds and then reverse it. However, some portion of the community opposed this idea, stating it was against the principle of the whole blockchain system.

At last, The part of the community which hard-forked the blockchain and reversed the stolen funds came to be known as Ethereum with ETH as its native cryptocurrency and another part of the community which stayed with the original blockchain and did not reverse the stolen funds is called Ethereum Classic with ETC as the native cryptocurrency.

Ethereum Classic and Ethereum are two separate blockchain networks that were created by a hard fork of the Ethereum network. They have significant differences in their codebases, development team and level of community support.

The Ethereum Merge in 2022 (Ethereum 2.0):

On September 15, 2023, Ethereum switched from its proof of work mechanism to proof of stake mechanism. The update to the new mechanism came to be known as The Ethereum Merge.

Proof Of Work (POW) vs Proof Of Stake (POS)

POW:

It is a process where the miners create and adds a block to the blockchain, this process involves solving complex mathematical problems. It is computationally intensive work and requires lots of electricity. The first miner to solve the problem gets to create a new block, and in return for the work, is rewarded (usually with a certain amount of cryptocurrencies).

POS:

In this process, the Nodes (a group of computers that validate transactions), “stake” their cryptocurrencies as a form of collateral. The nodes are also called validators. The validators are then chosen to create the next block in proportion to their stake. The validator with the highest stake has the highest chance to be chosen. The chosen validator then creates the next block and is rewarded.

Why Proof Of Stake Is Better

Proof of stake is better than proof of work consensus because it does not require the miner to perform complex mathematical problem-solving. The mining machines which carry out the problem-solving process are very resource intensive and use a lot of electricity. Hence, proof of stake is more environment-friendly. It’s also speculated to increase accessibility for users in the Ethereum network Some of the more popular cryptocurrencies using proof of stake consensus are BNB, Cardano ADA and Polkadot DOT.

Ethereum In 2023

Ethereum switched to a proof-of-stake consensus last year, cutting down its energy needs by 99%! Moreover, introducing the concept of splitting the horizontal database would help to decrease transactional fees and transactional speeds. This will attract investors. Ethereum has been through some rough patches last year. The crypto winter was caused by multiple reasons such as,

• The FTX Meltdown
• Russia Ukraine war
• Increasing Interest rates

However, it’s showing signs of recovery and looks like the most promising cryptocurrency in 2023. Cryptocurrency is an extremely volatile market and careful analysis is advised before buying any cryptocurrency.

Conclusion:

Ethereum has been well known for its growth and development in its technology. With the latest update of Ethereum 2.0, it has a lot in store to offer for crypto traders. Ethereum is showing promising signs of growth in 2023 and attracting more and more investors. It’s predicted to see overall growth in Ethereum in 2023 and is among the most trending cryptocurrencies in 2023.