The Ethereum Blockchain is a revolutionary Blockchain network that hosts the second-largest cryptocurrency in terms of market cap. Many people believe that Ethereum is capable of overthrowing Bitcoin as the dominant coin in the market. It’s because Ethereum operates on a more future-proofed network in comparison to many other cryptocurrencies, including Bitcoin. Ethereum Blockchain gives you a lot of functionalities and enables you to develop new cryptocurrencies, dApps, Defi, NFTs, smart contracts, and much more.
With the Ethereum Blockchain network constantly on the rise, it is safe to assume that Ethereum is going to play a pivotal role in the future of cryptocurrency as well as several other industries. In this article, we are going to delve into Ethereum Blockchain to understand how it is different from other Blockchains and what to expect from it in the future. So, without further ado, let’s dive into it!
What Is Ethereum?
Basically, Ethereum is a decentralized Blockchain platform that you can use to develop smart contracts, new cryptocurrencies, decentralized applications, and much more. It works on a peer-to-peer network model, connecting users directly from diverse regions without needing a third-party network or an intermediary. The Ethereum network exists with the primary aim of truly decentralizing the internet, paving the way for a series of innovations without the need for a centralized network. Just like any other Blockchain, Ethereum’s transaction records are immutable, and they can be verified.
Essential Aspects Of The Ethereum Blockchain, What Makes It Different?
Although Blockchain technology came into the mainstream as a by-product of Bitcoin technology, it has evolved significantly, and now, it allows you to create a more complex and functional network for cryptocurrencies and many other things. Generally speaking, all Blockchains work on the same core principles; however, they also have a few differences in their working, which gives them an edge over each other. Ethereum has evolved from being yet another random Blockchain as it takes a step further in its technological advancement. So, what makes the Ethereum Blockchain different from others? Let's find out below.
Proof of Work is the consensus algorithm used by the Ethereum network. It is founded on the principle that your influence over the Blockchain network is directly proportional to your computational capacity. This means that users with more power are more likely to get their transactions confirmed quickly. The proof of work exists to allow all nodes in a decentralized network to agree on the same truth. In theory, it’s the most decentralized consensus algorithm and resistant to Sybil attacks. However, sometimes, a group of miners can manipulate and increase their influence in the network to gain undue benefits by joining forces.
2- Virtual Machine
Basically, the virtual machine is the software that allows smart contracts to be executed. In simple words, it is the software that makes the virtual machine run on top of checking and executing the code. It's like a massive knowledge database that keeps track of all transactions since Ethereum's birth. It accomplishes this by taking into account the current state of the Blockchain on top of keeping track of all the individual transactions as well as the state of the Blockchain at the moment of the transaction.
All in all, when a smart contract runs, the virtual machine gets access to all the data since the contract's genesis. The virtual machine is also responsible for the security of the Blockchain, and the way it works also makes it extremely difficult to hack the Blockchain. It's the most advanced and secure virtual machine capable of creating and running any app, which also makes it complex.
3- Address Format
Another critical difference between Ethereum and other Blockchains is its address format. For instance, Bitcoin addresses are made up of a public key along with the hash of the public key. Ethereum addresses, on the other hand, are made up of a public key, a private key, and a nonce. In the Ethereum address format, the public key is your public address, which you share with the rest of the world (like an account number) to make transactions.
The private key is the one you never share with anyone and keep to yourself. Finally, the nonce is not a key; it’s a random or pseudo-random number that is attached to communications by authentication protocols to protect against replay attacks or double-spend.
4- Data Transport
The Ethereum Blockchain is more than just a database. In fact, it also serves as a means of data transportation, allowing you to communicate with the rest of the world using application programming interfaces (APIs) and Web3. Web3 is a collection of libraries that enable the Blockchain interface with other apps and the outside world. Since Web 3.0 is built on top of HTTP and JSON, it has its fair share of limitations. Still, this framework offers tremendously helpful features enabling users to develop various Blockchain-based applications, including wallets, exchanges, and other apps.
5- Data Structure
The Ethereum Blockchain keeps all information in data structures known as blocks. Each block comprises a data set used for various reasons. For instance, the block contains information on transactions that have taken place on the Blockchain, including the sender's and receiver's addresses as well as the value of the transaction. It also includes the status of the Blockchain during the transaction along with the sender's nonce. Aside from this, a block also contains information about the miners, the number of confirmations for each block, the hash of the previous block, as well as the timestamp at which the block was created.
6- Application Programming Interface
Blockchain can communicate with apps via different application programming interfaces (APIs). For instance, you can use the Web3 API to control several components of the Blockchain, like creating, deploying, and executing smart contracts. Moreover, this API allows you to interact with the Blockchain allowing you to retrieve its data with simple queries. For instance, you can use this API to create a wallet to store your crypto using a smart contract and retrieve it whenever you want. Moreover, you can use this API to develop exchanges and games.
The Future Of Ethereum
Although it is unarguable that Ethereum is one of the most powerful and popular Blockchains ever to exist, its network is not very reliable as it has scaling issues. Currently, the Ethereum Blockchain can only handle about 20 transactions per second, and this number will only get worse as the Blockchain grows. However, the bright side is that there are always possible solutions to these problems. For instance, the Ethereum Foundation recently released a new Blockchain called Ethereum 2.0 to overcome Ethereum's scalability issues. Ethereum Foundation is constantly working to evolve its Blockchain network to bring new exciting features on top of fixing its current issues. Considering this, it's safe to assume that the future of Ethereum is bright.
All in all, Ethereum Blockchain has come a long way from where it started, and it has grown to become a pivotal part of decentralized applications. Plus, it’s revolutionizing all the industries and opening up countless new opportunities. Considering this, it is clear that the Ethereum network has a lot of potential, and it’s going to grow further in the coming years. If you want to dive into the decentralized world and reap the benefits of Blockchain, get in touch with us.
Here at IIInigence, we stand proud as the best Blockchain development agency offering a wide range of services, including Blockchain consultancy as well as cryptocurrency, smart contract, dApp, Decentralized Marketplace, and Metaverse development. Whether you need to use Ethereum, Solana, or any other Blockchain, we can cater to all your needs with an assurance of maximum efficiency. So, what are you waiting for? Get in touch with us and schedule a call with one of our experts to see how we can help you fulfill your goals.