Ethereum: Smart Contracts For A Smart Century
Ethereum: A Brief History: The Introduction
Ethereum is arguably one of the most influential blockchain ecosystems that has been created in the entirety of cryptocurrency (many, including myself, would argue that Ethereum has had more influence on the expansion of the blockchain ecosystem than Bitcoin). Ethereum was released on July 30th, 2015, over five years ago and has revolutionized the blockchain sphere ever since. Ethereum is a decentralized open-source blockchain which features smart contract functionality which in return, enables other blockchain start up projects to be developed and expanded upon Ethereum’s blockchain. The creator of Ethereum is a man by the name of Vitalik Buterin. One of Vitalik’s main goals when developing Ethereum was to expand and enable the future development of decentralized applications via blockchain which unfortunately, at the time, the largest blockchain project to exist, Bitcoin, lacked any scripting language to build decentralized applications. Thus Ethereum was born.
Ethereum: The Queen Of Cryptocurrency: A Deep Dive
Ethereum, like Bitcoin, has conceived of its own monetary revolution, not only in the traditional financial sector, but in the cryptocurrency sphere as well. Ethereum has been foundational for the expansion of cryptocurrency projects and the inception of hundreds if not thousands of new cryptocurrency tokens, this is because of Ethereum’s design. Ethereum is meant to be an infrastructure based blockchain project, where other cryptocurrency projects can develop their own smart contracts and utilize the Ethereum standard to issue and mint tokens: the Ethereum standard for tokens is known as ERC20. When observing the utility and massive amount of expansion Ethereum has conceived of for the blockchain sphere, it is important to understand just how influential Ethereum has been for blockchain startups.
It is estimated that approximately 40% of blockchain projects were built on Ethereum (though some have migrated to their own blockchains, Tron and ICON being notable examples) which proves how Ethereum has become an incumbent necessity to the flourishing of the cryptocurrency and blockchain sphere. Specifically, surrounding developers, approximately 250,000 developers are building on Ethereum, to put this in perspective, that number is larger than the entire city of Richmond, Virginia: all developing on Ethereum. Ethereum has perpetuated the expansion of decentralized applications and projects that has enabled the entirety of the cryptocurrency market to flourish and in return, has expanded upon the blockchain sphere for new companies and new projects throughout the globe. Ethereum has its own payment system, is open-source, has its own scripting language and utilizes peer-to-peer technology (like Bitcoin) to allow for computers to directly connect with one another without a centralized system or institution.
Smart Contracts: A Smart Technology For Intelligent Innovations
In a world that unfortunately accompanies greed, avarice and malevolence, it is necessary to develop an innovation that prevents such vices of human weakness within the blockchain sphere. Thus, smart contract functionality was born, specifically upon the Ethereum blockchain. Smart contracts, in essence, verify, enforce and facilitate cryptocurrency transactions. Smart contracts are negotiations that are written in code, perpetuated by computer protocols that cannot be tampered with which in return, prevents malicious intent or hacks from occurring on a platform. Smart contracts automatically execute and document events and actions in accordance to an agreement made by specific parties that are developing the transaction. Ethereum allows for developers to build decentralized applications on its blockchain which enables start-ups to issue new tokens based off of the Ethereum blockchain, simultaneously, Ethereum decentralized applications can utilize Ethereum smart contracts to enforce, verify and document specific events and transactions that occur on that application.
The Ethereum blockchain operates through an extensive amount of volunteers on the network that assist in maintaining the consensus rules of the ecosystem. These volunteers are known as Ethereum nodes and are deployed throughout the entirety of the globe. It is important to note that with the inception of Ethereum 2.0, a massive upgrade within the Ethereum ecosystem soon to be released, there is a monetary incentive through Ethereum’s proof-of-stake consensus algorithm to verify these blocks (an amalgamation of transactions) and keep the networks integrity and honesty intact; volunteers who run nodes garner rewards in Ethereum for maintaining the integrity of the network.
Smart Contracts: Use Cases, Examples, Accomplishments
Smart contracts predate the existence of blockchain and cryptocurrency but Ethereum was the innovation that brought about the conception of smart contracts into the real world and specifically, blockchain. A smart contract defines the terms of specific transactions and executes the tasks assigned to that specific negotiation without human error or malicious intent. Smart contracts can allow individuals throughout the world to transact globally without the need of a central intermediary. Furthermore, the creation of smart contracts reduces the cost of middle-men and brokers who would have had to been utilized for their services in the blockchain sphere if smart contracts didn’t exist and this could also result in human malevolence or error. Smart contracts, in essence, reduce the necessity of administration, thus saving time through complete autonomy and because of the simple fact that that all data is backed up via the blockchain, there is no fear of loss of any information stored via smart contracts. There is absolutely no way smart contract’s content can be manipulated or altered. Smart contracts on the Ethereum blockchain became a crucial component in not only the expansion of blockchain but cryptocurrency as well.
On Ethereum, tokens can now be created with a simple source of smart contract code, which is a primary example on how so many projects and cryptocurrency start ups are built on Ethereum (and now, many cryptocurrency projects are creating their own smart contract codes, which will allow for new coins to be minted on other blockchains other than Ethereum). Since the inception of Ethereum, numerous blockchain projects have created their own smart contract codes to allow for new tokens to be built upon preexisting blockchain networks. These blockchain projects include, but are not limited to, Cardano, EOS, Tron, ICON, Stellar, Cosmos, Vechain, Waves, Ethereum Classic, Ontology, Qtum etc. There are numerous applications that smart contracts can be utilized in a variety of different business institutions.
Smart contracts can be deployed for a variety of use cases, beginning with insurance. Smart contracts can assist, given their seamless execution and recording of transactions, with the streamlining of the claims process; for example, in the case of an individual passing away, their death certificate could easily be notarized and stored via a smart contract without any risk of error or mismanagement. Policies for example, such as finances of the deceased and who they go to, could easily be given out to beneficiaries through a trigger point of the said smart contract. In the supply chain, for retail stores for example, smart contracts can provide transparent and reliable storage of transactions and records of goods between numerous holders of products. Payments in the supply chain ecosystem could be executed between parties instantly upon delivery. Another example would be the complete tokenization of real world assets; smart contract could encode the digital ownership of tokens in association to assets backed by these coins without the fear of losing that specific data.
Smart contracts have the potential to revolutionize the employment sector, providing individuals with developmental expertise to be hired to specific public and private entities to deploy smart contracts. For example, if Walmart decided to utilize smart contracts for its supply chain and logistics records, they could hire a smart contract developer to implement such a technology. Smart contract developers could also be hired in the world of DeFi for individuals looking to provide seamless and secure records of data on their decentralized applications.
Smart Contracts: Ethereum: New Ingenuities For Trusted Transference
As a relatively new technology, it is incumbent to understand how smart contracts actually work, specifically in this case, on the Ethereum blockchain. As specified before, smart contracts as an idea has existed before the inception of Ethereum, however, Ethereum brought this new innovation to light, becoming the harbinger of innovation in the blockchain and cryptocurrency ecosystem and sphere. Smart contracts, before their inception on Ethereum, operate very similar to vending machines in a lot of different ways. In a smart contract, you drop a specific amount of money into the contract, in this case, Ethereum, and whatever data is associated with that contract drops into your account or “wallet.” Rules and penalties associated with smart contracts are written in code and cannot be tampered with, thus, the smart contract enforces the negotiations of the contract to ensure the validity of the transaction.
Several users can participate on a blockchain network through smart contracts, for example, on Ethereum, nodes associated with the smart contract are given their own addresses on the blockchain so they’re easily identifiable and transference of data or monetary means are efficient and reliable. Smart contracts allow startups to deploy their own decentralized applications on Ethereum through a system of inputs and outputs that cannot be tampered with and are irreversible.
But what are inputs and outputs? In a smart contract, the input is based on computational codes that are based on specific agreements made within the contract; in essence, if the input condition occurs, then the output condition is executed as well. The smart contract receives the input data and on the basis of the data itself satisfying the smart contract agreement which then executes the output: an energy transfer in the form of a transaction from A to B. Lets look at a real world comparison in regards to a simple explanation. You’re at a restaurant and your waiter asks you what you would like to eat, your input is telling the waiter what you’d like to eat (input A) and then, the waiter executes that agreement to the chef and then brings you your food (input B). The output would be for example, the food delivered or the execution of payment for the food itself. With smart contracts, the concept of human error is easily eliminated as smart contracts are immutable codes that cannot be tampered with and are only executed if the input is in terms with the agreement created within the contract itself. This is not only exclusive to the Ethereum blockchain, but every single mainnet blockchain with their own smart contract codes are able to emulate this secure paradigm of executing immutable transactions. Smart contracts further the reliability of negotiations that traditional agreements via business contracts cannot; a business contract can easily be tampered with without a smart contract. Once a specific negotiation is made via a smart contract, that piece of data is irreversible. Traditional contracts rely on two or more institutions to execute the contract, smart contracts work on an immutable digital ledger; if traditional businesses utilized smart contracts, the efficiency of creating accounts, escrow, data transference or negotiations of agreements would be much more reliable and secure than traditional contracts subject to human error.
Ethereum: A New Precedent In Blockchain
Ethereum has set a new precedent in the blockchain sphere. Not only is Ether, the coin within the Ethereum blockchain number two in market capitalization, second only to Bitcoin, but Ethereum has enabled thousands of startups to deploy thousands of decentralized applications onto their infrastructure based platform. Not only that, many prominent blockchain blockchain projects that have migrated to their own mainnet (Tron and ICON for example) were created on the Ethereum blockchain. In essence, Ethereum has created the bedrock for projects to be built on Ethereum and then, migrate to their own blockchains which in return, perpetuates the number of blockchains that exist globally. It is evident that through Ethereum’s smart contract functionality, scripting language and infrastructure based ingenuities, this project has truly revolutionized the blockchain ecosystem forever and has propelled the blockchain sphere into the mainstream eye.
Disclaimer: Cryptocurrency investing requires substantial risk, do not invest more than you can afford to lose! I am not a financial adviser and I am not responsible for any of your trades. It is incumbent that you always do your own research before investing in anything
