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Ethereum 101 | Learn all about Ethereum 2021

Ethereum 101

Ethereum is the second biggest cryptocurrency ever. Thanks to the Ethereum blockchain, many projects have been made possible because of the infrastructure it provides. Ordinary people with the ability to code can create dapps (decentralized apps) on the network. Thanks to Ethereum, there are now many DeFis (decentralized finance) platforms where people can borrow money. Dexs (decentralized exchanges), also on the Ethereum network, allow users to trade crypto without any identity verification like standard exchanges.

Further Info

Ethereum currently runs on a proof of work system of reaching consensus. Proof of work means to keep the blockchain moving mining becomes a necessity. Mining is not energy efficient because there is a lot of wasted effort on the computer’s part if they do not fully solve the block. 

Dapps are applications that run on the Ethereum blockchain. They store their data in the blockchain and smart contracts for logic. So whenever you make a trade on a Dex, it creates a smart contract on the Ethereum blockchain, which has to be processed by the entire network for your exchange to be fulfilled. The same logic applies to DeFi’s process. That is the simple explanation. There is a lot more that goes into it, which you can explore on Ethereums own website.

Dapps on the Ethereum blockchain run on the “Solidity” language. Solidity is the language developed explicitly for creating Ethereum smart contracts. One main issue we’d like to point out with Ethereum is that the language it uses was explicitly created and solely used by Ethereum – it will be hard to find people who know Solidity since it’s a super-specialized language. Since the inception of Ethereum, other blockchain projects have come out that are not tied down to one single language. For example, Polkadot is one of these projects. They are not tied down to one specialized language.

As stated previously, Ethereum runs on the proof of work method of consensus. This is the same way Bitcoin enters circulation, and the transactions are fulfilled. All the records of every transaction are stored on the block like a ledger. Soon Ethereun will be proof of stake based, where there will only ever be one miner per block selected by various criteria specific to that block. You will also no longer require to have lots of hardware to keep the blockchain moving.

We have further information on mining in a separate article. Also, if you wish to find out how Ethereum will change in the future towards a proof of stake system and what that means for the crypto, you can check out our article on that topic.

If you wish to find out more about Ethereum, it would be wise to read their whitepaper. Whitepapers are the explanation of the project and the philosophy behind it. So you can often tell a lot about a project by reading their whitepaper, even if they are in the early stages of development.

Decentralized Finance

Decentralized finance platforms are a relatively new concept. They are only a few years old compared to crypto, which is now over a decade old. DeFi’s allow people to put their crypto into a stake-like state where other people can borrow your money to collect interest on your crypto. This is a popular method of obtaining passive income in crypto. Beware of the insanely high APY’s – some might be scams.

Decentralized Exchanges

Decentralized exchanges are similar to regular exchanges. The most significant difference is that it all runs on the blockchain. There is no more middle man to store your funds for you, no middle man to facilitate the trade, and everything happens on the blockchain and your wallet. However, there are higher fees because Dexs run on the blockchain, but once Ethereum moves over to a proof of stake system, the costs will be drastically lower.

Swapping on Bancor.network | Ethereum 101

Ethereum’s Future

Currently, Ethereum is seen by many as a rather costly network, sometimes fees exceeding double digits on rare occasions. Locking your crypto on Dexs sometimes could cost you over $100 due to the cost of the smart contracts it requires. However, in the future, Ethereum will be based on a proof of work system of reaching consensus while also adding a second layer to the blockchain to decrease costs further.

We believe it would be highly beneficial for Ethereum to add additional languages for their smart contracts. Some projects are essentially improved Ethereum. If Ethereum stays the same, it is unlikely that it will hold its position as the second biggest crypto for long.

Jobs in Ethereum

There is a rising interest in cryptocurrency developments. If you check out this website, you can see a demand for jobs in the crypto-sphere ranging from positions at Brave (creators of Brave browser and the BAT token) to Uniswap (decentralized exchange). Crypto is the new California gold rush, and there is loads of money to be made. So if you’re a coder, this might be the avenue for you.

A great feature of Ethereum is that there is burning of the tokens in circulation. There are specific triggers in the programming of the crypto to burn some of the tokens in circulation. Burning is needed to keep the crypto scarce because Ethereum has an unlimited supply. If there were no triggers to destroy some of it, the more that came into circulation, the less it would be worth, like today’s inflation. If you want to see burning live, check out this site.

Conclusion

Ethereum is the biggest project in all of the crypto since the creation of Bitcoin. It opened a whole new world for finances within the crypto market and removed some of the need for centralized exchanges. Ethereum is also still evolving and, in the future, will be even more efficient at what it does once it merges over to a proof of stake system.

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