ा cryptocurrency Ethereum, is one of the largest cryptocurrency project in the cryptocurrency industry. Ethereum itself is a digital platform that is based on technology blockchain or blockchain. Its goal is to become a blockchain capable of running decentralized applications.
To achieve this, this project has a blockchain and a cryptocurrency with unique characteristics. Among them the ability to use and create Smart contract and new Tokens. Both are powerful functionalities, which allow it to establish itself as one of the most complete and powerful blockchains in the crypto world.
The network currency is called Ether (ETH), and like Bitcoin (BTC), Ether is characterized as a cryptocurrency that can be used as a peer-to-peer payment method. Another similarity with Bitcoin and other cryptocurrencies is that it is not controlled by any government or regulatory body. Its development is marked by Ethereum Foundation, its Core Team and the community it supports and supports. Another important point is that it uses the consensus protocol Proof-of-Work (PoW), using the Ethash algorithm. Although this may change in the short term with the launch of Ethereum 2.0 and the jump to being a cryptocurrency using the protocol Proof of Stake (PoS).
The development of this blockchain began thanks to the work of Vitalik Buterin 2013 the year.
Ethereum technical characteristics
Ethereum is a cryptocurrency that works thanks to the PoW consensus protocol using the algorithm Ethash. This algorithm is designed to be highly demanding and targeted at GPU mining. For this reason, mining was initially highly decentralized and diverse.
Ethash uses the Keccak hash function, also known as SHA-3. In this way, the algorithm seeks to use highly secure cryptographic elements. At the same time, Ethash is planning to have intensive memory and cache usage. Both features are aimed at offering resistance to mining by ASIC and avoid centralizing it.
This cryptocurrency currently has an annual issue limited to 18 million Ethers per year. In other words, each year the mining activity can generate a maximum of 18 million new coins. However, the total emission is infinite. To achieve the emission, the network has a coinbase transactions quite peculiar. Firstly, if a miner finds the solution to a block, he receives a reward of 2 ETH. But if another miner also finds a solution to that block at that time, that miner also receives a reward. In this way, the coins are issued on the Ethereum blockchain.
The initial issue of Ether on the blockchain was related to the pre-sale that was made to drive the project. Back then, a total of 60 million Ethers were created. Of these, 12 million were used to create a development fund, this is the beginning of the well-known Ethereum Foundation.
However, Ethereum is an ever-evolving blockchain. One of the major changes that will be seen in Ethereum in the coming years will be the abandonment of PoW to move to a PoS mining system. With this change, Ethereum will start to create cryptocurrencies for its blockchain in a completely different way than the current one, avoiding the use of miners and encouraging greater economic participation in the blockchain.
Gas, the basis of everything
El Gas It is a concept very typical of the Ethereum network. This is used to measure the work done within the blockchain. Each action in the blockchain as an operation or a set of operations has a specific cost that is given in Gas units.
Among the functions of Gas within the blockchain we can mention:
- Assign a cost to the execution of tasks. Gas is used as a unit to measure the cost of performing a certain action within the blockchain. Each action has a cost in Gas and a set of actions carried out adds the total cost of said operation. In this way, we can see Gas as the price to pay for performing actions within the blockchain.
- It helps improve system security. As each action has a price, this helps prevent the blockchain from stopping its operation and undermining its security. This is possible because Gas helps protect the network from spam attacks. For this, gas involves an expense that prevents them from being DDoS attacks easily over the network, attacks that can leave millions of users without service.
- Reward the miners. The actions on the blockchain depend on its execution on the hardware that is in the hands of the miners. To pay for this use there is Gas.
Block generation time and size
Ethereum is characterized by calculating the size of its blocks in a somewhat particular way. Unlike Bitcoin, where its size is limited to 1MB, on Ethereum its size is limited to a specific amount of Gas. To be more precise, the Ethereum block size limit is 12.500.000 Gas (as of February 2021). This means that each block can contain a total of operations as long as it does not exceed the specified Gas limit.
Generally, a block can contain about 500 payment operations between accounts, the simplest of possible operations. In the case of a smart contract, the operations of one of them can easily reach the Gas limit of each block.
Another difference from Bitcoin is the block generation time. In Bitcoin, each block is generated every 10 minutes, while in Ethereum this value is variable. In principle, each block was generated approximately every 16 seconds. This value increased to 30 seconds in 2017, and currently stands at 14 seconds on average. This means that it is generally faster in providing confirmations than Bitcoin, which has a positive impact on its possibilities as a payment system.
Ethereum 2.0, the long-awaited promised future for Ethereum
Ethereum, like most blockchains, has a huge problem: it cannot scale correctly to serve the millions of users that its network has at the moment. This network architecture problem is something your developers are aware of and desperately seeking to fix, and such a solution is called Ethereum 2.0.
Ethereum 2.0 is a project that began its development in 2017 with the arrival of Ethereum Metropolis and its two updates Byzantium and Constantinople. At that time, the transformation of Ethereum began to seek to provide it with a better ability to scale, reduce commission costs and control the mining of the cryptocurrency that already accused of problems such as “the Ice Ages”, those dangerous moments in which the Ethereum mining would be so complex that it would be impossible for the network to carry it out.
Early efforts (in 2017) led developers to play with options like Proof of Authority (PoA) and Proof of Stake (PoS) on the Ethereum code. Projects such as PoA Newtork and PoC that gave birth to Casper, the protocol that would be chosen to replace PoW on Ethereum, and turn Ethereum into a PoS network.
However, everything seems to indicate that the objectives of the Ethereum devs with Casper are, at least, of such high complexity that the launch of this new update has been delayed several times, while the current network suffers more and more from its pressing limitations. In fact, in 2019 the PoA Network was fully operational and the long-promised Ethereum 2.0 was not yet out. This situation was taken advantage of by the competition, which now presents more worked and functional solutions today, such as the case of Polygon, RSK and Binance Smart Chain.