It was not long ago that Ethereum was dubbed as the project that was going to change the world from being centralized to the decentralized one. While Bitcoin and its blockchain laid the foundation of decentralization, it was Ethereum that gave a vision of being flexible and dynamic blockchain which could solve real-world problems.
Ethereum introduced the world to smart contracts and became the biggest platform to launch projects and Dapp’s creating a world of altcoins. There were all kinds of predictions as to how Ethereum would take over Bitcoin it the battle to be the top coin. But then came 2018 and Ethereum was in all sought of troubles and challenging Bitcoin was the news of the past. At this moment, Ethereum is still in doldrums as how its present and future looks like. There are various ways in which Ethereum can move and the article will try to explore the same.
To understand what where Ethereum can head as technology or as an investment, one will have to deep dive into the history of the second most famous coin.
What is Ethereum
Ethereum is an open-source public service that utilizes blockchain as the base technology to facilitate smart contracts and cryptocurrency trading securely without a third party. There are two accounts available through Ethereum: externally owned accounts (controlled by private keys influenced by human users) and contract accounts. The coin Ethereum is dubbed to be the medium of exchange and it allows developers to deploy all kinds of decentralized apps.
Due to its attribute of hosting other projects and Dapp, A lot of people consider Ethereum, just as a platform but it offers a lot more things attached to it such as smart contracts, Ethereum Virtual Machine (EVM) and its actual currency, Ether, for peer-to-peer contracts.
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History of Ethereum
The idea of Ethereum was first introduced by Vitalik Buterin in late 2013 as a result of his experience in the Bitcoin community. Shortly thereafter, Vitalik published the Ethereum white paper, where he describes the technical design in detail for the Ethereum protocol and smart contracts architecture.
Then, in January 2014, Ethereum was formally announced by Vitalik at The North American Bitcoin Conference in Miami, USA. Around the same time, Vitalik also started working with Dr. Gavin Wood and together they co-founded Ethereum.
In April 2014, Dr. Gavin published the Ethereum Yellow Paper that served as the technical specification for the Ethereum Virtual Machine (EVM). In brief, the EVM focuses on providing security and eliminating untrusted code in order to prevent denial-of-service attacks from computers all over the world.
The legal complexities of raising funds through a presale led to the creation of the Ethereum Foundation (Stiftung Ethereum) in June 2014 in Zug, Switzerland. Ethereum launched pre-sale of ether coins, Ethereum’s network medium of exchange, for 42 days between July and August of 2014 and raised funding of 18.4 million dollars in exchange for 60,102,216 ether.
With the money raised, the company known as Ethereum Foundation could pay back legal debts, the months of developing effort, and the finances of the ongoing development of Ethereum.
The Development of Ethereum
After the successful presale of the token and subsequent capital raise, a second organization which was responsible for the development called ETH DEV began its work under contract from Ethereum Foundation. Developer interest in Ethereum grew steadily throughout 2014 and the ETH DEV team delivered a series of Proof-of-Concept (PoC) releases for the development community to evaluate. There were constant updates and frequent posts by ETH DEV team which kept to the community informed about the Ethereum blog also kept the momentum rolling for Ethereum.
In April 2015, the team also announced the DEV grants program, which provided funding for suggestions and contributions by developers for both to the Ethereum platform, and to the projects based on Ethereum. While there were already hundreds of developers contributing their time and thoughts to Ethereum projects and open-source projects, this program served to reward and support those developers for their contributions. The DEV grants program continues to operate today and funding of the program was recently renewed in January 2016.
On top of that, the Ethereum Frontier network launched on July 30th of 2015. This allowed developers to begin writing smart contracts and decentralized apps on the live Ethereum network. Miners began to join the Ethereum network to help secure the Ethereum blockchain and earn ether from mining. Although the Frontier release was intended for use by developers as a beta version, it resulted to be more capable and reliable than anyone expected.
From its inception in August 2015 to January 2017, Ethereum was largely a work-in-progress and suffered from several bugs that kept companies from wanting to build on its new smart contract infrastructure. This same unstable infrastructure was responsible for the coin’s performance in 2017. For the entirety of 2016, however, Ethereum’s price floated between $1 and $7, though it did reach $11 before the infamous DAO hack took place.
While the entry in 2017 was on wobbly grounds, 2017 was the year that changed Ethereum’s fortune forever. Ethereum launched smart contracts for the test. This allowed the startups to derivative tokens with relative value to Ether, in what is now referred to as an ICO, or initial coin offering. And with Ethereum stabilizing, and more and more projects running towards ICO, 2017 became the “Year of the ICO” and saw the launch of popular tokens built on Ethereum like Golem, OmiseGO, Augur, TenX, Status, Monaco, Decentraland, and hundreds of others experiencing enormous growth.
Ethereum and Its Problems of 2018
2018 proved to be a complete opposite for Ethereum compared to 2017 as the blockchain of Ethereum started facing trouble. The smart contract blockchain which was heralded as the future of the technology and the so-called 2.0 version of the distributed ledger technology soon began to lose its track. 2018 unearthed some critical problems for Ethereum which could make or break its future. The problems that came forwarded included-
- The ICO and Dapp’s turned into nonsense: With a platform in place, Ethereum soon became a platform that could support many different applications, for decentralized applications (dApps). Because of this open and accessible blockchain, many developers jumped aboard and began utilizing ICOs to fund their endeavors, offering their native ERC-20 tokens to all comers to raise funds to complete their blockchain projects. With so many apps and projects, Ethereum felt the full force of a massive load of transactions, and it failed dismally to deal with the overloading. The Ethereum network can only process around 15 transactions per second, and Cryptokitties made it clear that there needed to be some scaling solution or upgrade for Ethereum to take the next step.
- Unable to quickly upgrade: Ethereum all of 2018 faced scaling issues. There were suggestions that the upgrades for Ethereum would be a solution for scaling issues. This included sharding, state channels, and Plasma, but there are also significant upgrades like Constantinople and Casper. Ethereum could only upgrade to Constantinople that too after a lot of hassle and still no concrete solution.
- Rising competition: A lot of projects which were on Ethereum became independent and started posing a competition to Ethereum, taking away a lot Dapp and projects from Ethereum. Platforms like Tron and EOS were less congested and come with impeccable speeds which enhance the Dapp experience.
What Lies Ahead of Ethereum?
Ethereum has seen its share of successes and failures in just 2 years. While 2017 took it all highs 2018 bough it to the ground. This let to a lot of speculation as to where was Ethereum headed. A lot of people called it the bubble, there was another set of people calling it still a sleeping giant. Here is the list of things that can go right or wrong for Ethereum.
If Things Turn Positive for Ethereum | Will Ethereum Rise?
1. Ethereum a Matured Coin and ICO’s: Ethereum Still has around 5000 projects which raised monies through ICOs are still operating and these projects are moving towards complying with government regulation creating a more transparent, verifiable, legally-compliant companies. As regulations around ICO’s become more clear across the globe, these project can begin accepting further investments using Ethereum as were as there could be flood gates for more ICO’s.
2. If Ethereum upgrades quickly and 2.0 be a game-changer: While Ethereum is facing scalability issues, it does have a plant to fight it. There are upgrades waiting in the alley for Ethereum in the alley and ones Ethereum is able to adopt sharding, state channels, and Plasma along with Casper, Ethereum will be much stronger blockchain and will regain its glory. Ethereum’s founder Vitalik Buterin is focused on Ethereum 2.0 and referred to it as “a combination of a bunch of different features that we’ve been researching, talking about and actively building for several years and that is finally coming together into this one coherent whole.” These words are worth considering, even more since Ethereum has a first-mover advantage in smart contracts.
3. Ethereum 2.0 could revive Ethereum Mining: As part of the 2.0 upgrade, Vitalik Buterin and his team decided to build an entirely new blockchain for the Ethereum network — one that operates solely via a proof-of-stake (PoS) system. In terms of mining, this was significant as The proof-of-stake system does not require cutting edge GPU’s, stacks of mining rigs or heavy power grids. PoS only requires people to “stake” their coins, and the minimum staking amount is 32 Ethers cutting the energy cost down by 99%. If the team can bring ETH 2.0 online successfully, the new code could complete transactions using just 1 percent of the energy consumed today.
If Things Turn Negative For Ethereum | Is Ethereum Dead?
1. Ethereum can’t scale globally: If Ethereum fails to upgrade, it will not be able to scale in the current implementation. This has led to a lot of people believe that Ethereum will fail, sooner or later. Ethereum blockchain currently allows only 15 transactions per second. Visa supports up to 45,000. This scalability problem is a significant barrier to mainstream adoption. It has led many experts to believe Ethereum was dying — and their Ethereum price predictions were near zero.
2. Competitions will cripple Ethereum: Since Ethereum exploded on the market, many projects even while residing on Ethereum’s blockchain created exact same projects and promised extraordinary improvements where Ethereum is failing. The success of these companies could be a major reason why Ethereum will fail and end up being a terrible investment. Any high Ethereum price prediction will be for nothing if these Ethereum Killers succeed. These projects include TRON and EOS for now but the list of future projects is never-ending. This includes Ethereum Classic, Straits, Waves, Lisk, Cosmos (ATOM) and Cardano (ADA) which are growing at a great speed.
Based on a report published by the International Energy Agency, if Ethereum were a country, it would rank higher than Mongolia in terms of energy consumption. This means the government will soon come cracking down on these miners.
It is easy to write off Ethereum and predict is demise after a tough year, and there has been a lot that has detracted from the potential of the ‘World Computer’, but Ethereum is still a big project to write it off. Ethereum has seen its problems and is looking to address them in years to come. There may not mean a massive lift off in 2019, but perhaps the beginning of robust and necessary growth. Its only time will say.
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