Ethereum outperforms other major crypto currencies in terms of average annual performance. However, be aware that such rewards are accompanied by volatility and risk.
Ethereum was worth $150 in the start of 2020. Its value has increased by more than 16 times since then! This success has nearly eclipsed that of other crypto-currencies such as Bitcoin, Ripple, Litecoin, NEO, and others.
Furthermore, while Bitcoin is the forefather of the blockchain and crypto-currencies, it has flaws and faults on which crypto-currency initiatives like Ethereum have built to offer technically more accomplished and innovative products.
WHAT IS THE PROCESS OF ETHEREUM?
Ethereum is a blockchain-based virtual money.
Ethereum, which debuted on July 30, 2015, is a decentralized exchange platform that allows users to create smart contracts using a Turing-complete language. These are pre-made contracts, apps that self-execute exactly as intended, with no downtime, censorship, or fraud, and no need for a third party to certify authenticity. For example, you may use Ethereum to create a future contract in which you decide to buy something only when certain conditions are met. Typically, this type of contract necessitates the participation of a notary or a trustworthy third party who will eventually ensure that each party fulfills its responsibilities. It goes without saying that such contracts are expensive. These Ethereum-based applications are built on a computer protocol that enables the verification and enforcement of a mutual contract between the parties. They are distributed over the blockchain, and anyone who wishes to consult them may do so.
This enables developers to create markets, store records of debts or promises, transfer funds in accordance with previous instructions (such as a will or a futures contract), or acquire many other things that have not yet been invented, for example, despite all of the risks associated with third-party intervention.
Ether is the Ethereum network’s virtual money.
Ether is the native coin used by the Ethereum network for smart contract settlement. With a market capitalization of more than $275 billion by mid-2021, Ethereum is the second largest crypto currency on the market, after only Bitcoin.
The Ethereum network, which facilitates the construction of apps, is at the center of many projects.
The Ethereum network is being used by an increasing number of people each year, which complicates its management. According to the specialized site Etherscan, the primary actors of this network (network nodes) are the United States (37 percent of the network), Germany (23 percent of the network), France (6 percent of the network), and so on. Since the beginning of 2020, the number of daily ETH transactions has surged by about 150 percent, considerably breaking previous records. This tremendously active network is at the heart of how a significant portion of the crypto assets market operates.
ETHEREUM VS. BITCOIN
The Ethereum blockchain integrates several Bitcoin-introduced features, notably “mining.” Mining refers to the process of creating money that is common to both Bitcoin and Ether. On July 30, 2015, the genesis block (the first block in the Ethereum network) issued the 60 million presale units. Additionally, 12 million were distributed to developers through the same block. Then it was up to the community of miners (the network’s nodes) to take charge and secure monetary generation. In this situation, the payout is 2 to 2.5 Ether every mined block, with a frequency of 13 seconds on average. This translates to a declining yearly money production of 5.5 million units in 2020.
And, in contrast to the deflationary theory that underpins Bitcoin’s money generation, there is no limit put on Ethereum’s money supply.
Above all, Ethereum is a network that enables the development of apps. Since 2017, hundreds of significant businesses have emerged (payment services, buying and selling, etc.). These companies frequently base their token on ETH.
As a result, Ethereum is becoming a major competitor to Bitcoin: on the one hand, because Ethereum’s average performance is higher than Bitcoin’s; on the other hand, various crypto-currencies are progressively competing with Bitcoin due to their superior efficiency. This explains why, as the cryptoasset market expands overall, Bitcoin’s proportion of total virtual currency valuation is decreasing.
Nonetheless, as of June 2021, the capitalization of Bitcoin is over 2.4 times that of Ethereum. The spread between Bitcoin and Ethereum is basically steady but is narrowing marginally. As of January 2018, the capitalization of Bitcoin was 2.6 times that of Ethereum.
According to the ETH/BTC ratio, Ethereum continues to beat Bitcoin on average, especially during bullish periods. If the long-term trend in the crypto asset market continues, with a significant acceleration in Ethereum’s average performance, it is not unthinkable for Bitcoin to lose its top position.
Furthermore, according to the Etherscan website, the number of daily transactions on Ethereum in May 2021 was nearly 1.2 million, with an average block time of 13 seconds. According to the specialized site Blockchain.com, Bitcoin has nearly 250,000 daily transactions over the same time span. Furthermore, it should be noted that in recent years, Bitcoin transactions have decreased marginally while Ethereum transactions have increased dramatically.
WHAT IS THE FUTURE OF ETHEREUM AS A VIRTUAL CURRENCY?
The Ethereum RoadMap is a collection of forecasts produced by the cryptocurrency development team. The Ethereum network, like Bitcoin, is set up in such a way that the difficulty of mining is regularly changed in response to the computational power of the mining community.
The public’s growing interest in Ethereum has quickly attracted a big number of new miners. As a result, the first impact of this mania is an increase in the computational capacity of the entire community, followed by an increase in the difficulty of mining.
Indeed, mining difficulty has risen dramatically since the beginning of 2020, from 2 to approximately 7.5 TH by mid-2021. This is the most significant rise in difficulty level that has been seen thus far. This mining difficulty had already risen dramatically from 2.3 to 3TH in September 2017. This increase in difficulty level frequency reflects the increased interest in Ethereum. However, the price trend does not always correspond to the mining difficulty level. This circumstance will eventually deter independent miners, for whom Ether will no longer be a profitable crypto-currency. Updates can be scheduled to avoid a spike in mining difficulty. This was the case in 2018 with the release of Serenity, a new version of the program.
THE BRAND NEW ETHEREUM 2.0
Ethereum 2.0 (also known as Serenity) is an enhancement to the Ethereum system that was previously in place. Indeed, the Ethereum system has been relatively slow up to this point, and mining challenges are increasing. The difficulty of mining Ethereum, for example, increased nearly 3.3 times between June 2020 and June 2021, which is significant. That is, more and more hashes are required to validate blocks, which requires more time and processing resources to mobilize, as well as a larger cost.
The challenge of this Ethereum Blockchain transformation is to facilitate the shift from a proof-of-work (like Bitcoin) to a proof-of-stake Blockchain system. The user makes at least 32 Ethereum available to the Blockchain network using this proof-of-stake Blockchain mechanism. In exchange, the person who banned his ETH is rewarded. The goal is to boost network liquidity and assure speedier transaction processing. In June 2021, the minimum number of units that can be blocked on Ethereum 2.0 has been set at 32, or more than 63,000€. According to the Ethereum Foundation Blog, this new approach will not only facilitate transactions, but it may also lower the present energy consumption of the Blockchain network by more than 90%. On December 1, 2020, the first Block Ethereum 2.0 was generated, and it is projected to spread gradually over the next few years. Ethereum would become a digital money with a more limited quantity and a more efficient processing system under this new arrangement. As a result, some regard Ethereum 2.0 as having enormous potential, potentially leading to Bitcoin’s demise.
