Major Highlights of the Ethereum Journey (2023)

Bitcoin and Ethereum were like the foundation of the cryptocurrency that everyone is known about. If you create a comparison between both, most people will prefer Bitcoin as the most essential cryptocurrency. Moreover, if you would ask anyone from the crypto market, they would prefer the Ethereum protocol. Now the question arises in mind why this technology is preferred over Bitcoin although its prices are far away from Bitcoin. Then why is this considered an Important crypto asset over Bitcoin? There are many platforms like bitcoin system trading site that can let you trade bitcoin easily and at the same time safely.

Six years have passed and Ethereum is still demanding in the market. Its essentiality cannot be ignored due to its major highlights.

While cryptocurrencies like Ethereum were the only mode of payment and the limit doesn’t end here

In late 2013, the co-founder of Bitcoin Magazine, Vitalik Buterin codified Ethereum on a white paper. This is a blockchain technology of the second generation, the first one was Bitcoin. Soon it picked up the hike and the next year of its origin, its crowdfunding started and eventually, the currency went on the network live for their users in 2015. However, provisions like deploying permanently and decentralization are allowed by the developers for this cryptocurrency. These applications were available in its blockchain.

Moreover, the blockchain of Ethereum is empowered with the concept of a DeFi system also known as the decentralized finance system. It is an application that provides financial services without any intermediate brokerage, any organization such as a bank, or exchange platforms. Apart from these, this mechanism is also available for underlying NFTs which are non-fungible tokens connected to the digital world.

What Makes Ethereum Special?

Ethereum has a speed two times faster than a Bitcoin blockchain, as it makes 13 transactions per second in comparison to Bitcoin’s 5 TPS. This technology is smarter, more automated, has contract features, and is able to make autonomous decisions.

The founder of this mechanism, Vitalik Buterin, argues that Bitcoin and blockchain together can benefit application development related to real-world assets, stocks, etc.

A Few Upgrades Since the Launch

Ethereum is one of the protocols which significantly upgraded with time. It passed through a lot of upgrades where the most popular one being ‘DAO Fork’ in 2016 to ‘Spurious Dragon’ in 2016. Moreover, their upgraded versions of it were accomplished with the hard fork technique.

A Hard Fork Role in Ethereum Upgradation

A hard fork is based on the rules implemented in the software that validates the blocks. It allows the new blocks and old blocks to be declared invalid. Moreover, in the case of the Ethereum protocol, a hard fork is here to fix the susceptibility found in its code. However, permanent splits were carried out by the hard fork along with it to split into Ethereum and its classic versions.

DAO Events Incorporated with Ethereum

Decentralized Autonomous Organisation (DAO) launched back in 2016, on the blockchain. DAO is an entity structure and a non-governed body launched for members who share a common goal and act as token holders in the entity.

In its initial phase, DAO raised more than $150 million from around 11,000 investors making it one of the largest crowdfunding campaigns. However, the scientists had concerns about DAO wallets getting vulnerable and easily accessible to hackers. While the programmers were working on fixing the bug, a hacker managed to drain DAO funds.

Though the hacking of DAO funds did not cost investors a real-money loss, however, the promising technology and the supporting community were to face heavy criticism and an existential crisis due to this incident. In the meantime, The related community was debating on how to respond to the DAO attack.

The founder of Ethereum, Vitalik Buterin proposed a new code for the prevention of moving stolen funds and blacklisting the hackers from the system. But, right after this, the hacker released an open letter to the community claiming that the funds were legal way and under the smart contract’s rules. The hacker also warned them that they’ll take legal action if the system will be attempted to seize.

After another heated debate, the Ethereum community came up with the second solution of the hard fork. Though the implementation of this solution was not in the hands of the developers, the permission of miners, exchangers, and node operators was also mandatory. Finally, in July 2016, the hard fork solution was implemented.

The Two Separate Communities

Not everyone was happy with the implementation of hard fork solution changes. Some of the investors were convinced to use the pre-forked version, which resulted in the division of two different blockchains – Ethereum Classic (ETC) and the blockchain.

Those who supported the old version of the technology adopted the Classic version while the newly implemented technology remained the blockchain.

Though the investors were able to restore their stolen funds the hack of funds and the emergence of the Ethereum hard fork raised a question about the community in its early phase. However, after the DAO funds hack incident, this technology arose as a vital pillar in blockchain and cryptocurrency finance.

The sequence journey from its ‘proof-of-work’ consensus to ‘proof-of-stake’ consensus with Ethereum 2.0.

After its launch, Ethereum thrived exponentially due to its fabulous possibility for many crypto-used applications. However, the protocol was not able to keep the balance between the demand and ranking of its operations. Due to this some extra charges or transaction fees were also increased. The gas fees of it were to reach $50 from 2020 to 2022 for every single transaction occurring on the platform.

Therefore, to solve this problem, the transaction process had to be upgraded for the platform. And the process goes on with its 2.0 version. They target thousands of transactions within seconds. Although it was very difficult to achieve, the only possible way was to split the workload into a smaller parallel blockchain with a command protocol of Proof of Stake blockchain. This is how this blockchain mechanism became much stronger and strengthened as well.

The primary variation after the upgradation was the change in the mechanism. The 2.0 version will be launched in 3 different phases – the beacon chain, the merge, and the sharding.

The first and second phases, i.e., the beacon chain and the merge has been launched, where the initial phase introduced the proof-of-stake to the ecosystem, and the second phase merged the proof-of-stake to the Mainnet and together they formed an execution layer called Eth1.

In the sharding phase, the database will be split horizontally to distribute the load. Sharding will allow the validators to reduce the usage of hardware as they would not need to keep data to themselves. And it will give decentralize the authority and security will be increased. Sharding is likely to be released in 2024.

Final Thoughts

Although Bitcoin can be considered a primary cryptocurrency, still the smartest technology’s credit goes to Ethereum. It is because this technology always proved that crypto is not just limited to a monetary value. It is a ground-level base for the development of protocols. Moreover, it was responsible for convincing many critics that crypto is much more valuable than a hypothetical situation.