Regarding the Cryptocurrency Realm: The Worldview You Need to Construct (Part 2)

Creating a Decentralized Ecosystem: Ethereum

Ethereum (ETH) is an open-source blockchain platform designed to facilitate the development and execution of smart contracts and distributed applications (DApps). Unlike other cryptocurrencies, such as Bitcoin, Ethereum places a stronger emphasis on providing a more versatile blockchain platform that enables developers to construct various types of decentralized applications.

Ethereum introduced a

cryptocurrency

called “Ether” (ETH), which is used for paying transaction fees, incentivizing miners, and serving as the operational cost for smart contracts. In comparison to Bitcoin (BTC), Ethereum provides a “Turing complete” virtual machine known as the Ethereum Virtual Machine (EVM). Users can create smart contracts on the EVM, which are automated contracts executable on the blockchain without the need for intermediaries.

Smart contracts allow developers to write code on the blockchain to implement specific functionalities, such as asset transfers, conditional payments, and voting. These contracts execute on the blockchain, ensuring transparency, security, and reliability, as their execution is verified by multiple nodes. Once deployed, they are immutable and cannot be altered.

History

When mentioning Ethereum, it's impossible not to bring up its founder, Vitalik Buterin.

Vitalik Buterin was born on January 31, 1994, in Russia and later moved to Canada, holding dual citizenship in both countries. In 2011, he discovered blockchain and cryptocurrency technology through Bitcoin and became deeply fascinated by it. In September 2011, he co-founded Bitcoin Magazine, a website aimed at providing readers with timely and accurate information related to blockchain.

The “impossible trinity” that blockchain faces refers to the challenge of achieving a balance between the three characteristics of decentralization, security, and scalability/efficiency simultaneously.

With the growth of cryptocurrency users, Bitcoin (BTC) has struggled to meet the increasing demands of users for low transaction fees, convenience, instant transactions, privacy protection, diverse assets, and a variety of applications. Faced with these challenges, Bitcoin has not presented a superior solution, and there are two primary reasons for this:

• Technological Challenges: BTC's problems stem from outdated technological solutions that fail to meet current demands. Even direct adjustments to BTC are insufficient to completely solve these issues and can potentially lead to new problems.

• Community Resistance: The BTC community prioritizes security over scalability.

  Afterward, Vitalik continued to contemplate further innovative applications of blockchain technology. Eventually, in September 2013, at the age of only 19, he published the Ethereum White Paper, outlining his vision for Ethereum's capabilities and potential use cases.

Current State

The key distinction mentioned above between Bitcoin and Ethereum lies in Ethereum's possession of the Ethereum Virtual Machine, which grants Ethereum its scalability. Additionally, Ethereum offers faster transaction confirmation speeds and enables developers to construct and deploy a wide array of intricate smart contracts and decentralized applications (DApps).

As demand and user base expanded, Ethereum encountered issues related to inadequate performance. In response to this challenge, Vitalik proposed a development roadmap for Ethereum.



Currently, within the entire cryptocurrency market, Ethereum holds a market share of approximately 19%, while Bitcoin's market share is around 48%.



Protocols built on the Ethereum blockchain involve amounts reaching into the tens of billions of dollars. Stablecoins, which can serve as an indicator, have a significant presence on Ethereum, with stablecoins issued on the platform totaling approximately $76.27 billion, constituting a market share of over 50%.



Additionally, according to developerreport.com, it can be observed that there are significantly more developers working on the Ethereum platform compared to other public blockchains.



In summary, Ethereum's underlying architecture provides it with scalability, the diverse range of protocols contributes to its composability, and the current number of developers and established protocols form a strong moat around Ethereum's ecosystem. Throughout each significant developmental phase of Ethereum, numerous investment opportunities arise.