Ethereum is a decentralized open-source platform which is accessible all over the world. On the platform, one can write code that can control digital value and run exactly as programmed. The native cryptocurrency token for Ethereum platform is Ether. After Bitcoin, Ethereum is the second-largest cryptocurrency in terms of market capitalization. Ethereum was developed and launched in 2015 with 72 million coins minted. Ethereum Virtual Machine is a decentralized virtual machine. It executes scripts in the international network made up of public notes. The decentralization of Ethereum means that it is not controlled by a single governing entity like other centralized cryptocurencies like Bitcoin. History has proved that centralized online services have many limitations and flaws and therefore there was a need to create a decentralized online platform. Although Ethereum have risks like reduction of mining reward and changes in inflation as a result of transition to Proof-of-Stake and Constantinople upgrade, Ethereum is the way to go for it provides a decentralized platform that makes sure that data and information of its users is safe from hacking.
Ethereum is autonomous and no one controls it because of its decentralization. Unlike a centralized system that has a single point of failure because it has a single-entity control, Ethereum has no single point of failure because it is decentralized. It provides an open platform that helps in accessing digital money and data services. The platform is ran on different computers owned by individuals who volunteer their devices all over the world and therefore Ethereum can never go offline. Personal information or data stays in the individual’s computer and content like videos and applications are solely controlled by the creators without having to go by the rules dictated by hosting platforms like YouTube or Application Store. “… Ethereum is capable of bringing its core principles-trust, transparency, security, and efficiency” (World Spectrum, 2020). What that means is that it Ethereum is guided by principles which will help it in achieving its goals.
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The main flaw in Ethereum is its fitness in terms of engineering soundness. The assumption that “smart contracts” require computations that are replicated on thousands of machines is risky. Ethereum, “… enables users to create decentralized applications on Ethereum’s Blockchain” (Ethereum, 2020). What that means is that the applications can be ether new ideas or the decentralized concepts that are already existing in the system. That is important because it does away with middlemen and the expenses that would otherwise be paid to the third party.
Ethereum provides Ethereum Virtual Machine which is the runtime environment that forms the basis of smart contracts on the platform. This is a risk because it allows users to run untrusted code hoping that the programs they execute do not interfere with other programs. It also makes the system very slow to process its operations. “Ethereum’s proof-of-work algorithm encourages decentralized mining by individuals” (Cointelegraph, 2018). This allows Ethereum, unlike other cryptocurrencies like Bitcoin, to use little of electricity and computing power and therefore can be used individuals. This will change the relationship between customers and companies because it has the potential of revolutionizing services that are web-based and sectors that have well developed contractual practices.
In conclusion, Ethereum was developed to revolutionize the digital platform of cryptocurrency. Its main characteristic of decentralization of its operations have made it easy and efficient to carry run its programs. It is a big risk to take when it is not possible to when the proof of stake and Constantinople upgrade is done, the mining reward will decrease by how much and how the inflation will change. However, despite the risks, Ethereum is a good platform because it is determined to secure the information of its users and it is cheaper because it has no extra costs which are associated with middlemen. It is also safe because it has no single point of failure because of its decentralization.
References
Cointelegraph. (2018, February 13). What is Ethereum. Retrieved November 17, 2020, from https://cointelegraph.com/ethereum-for-beginners/what-is-ethereum
Ethereum. What is Ethereum? (n.d.). Retrieved November 17, 2020, from https://ethereum.org/en/what-is-ethereum/
World Spectrum. (2020). Cryptocurrency. Pixabay. Retrieved November 17, 2020 from https://pixabay.com/photos/cryptocurrency-concept-blockchain-3409725/
