Clearing of common misconceptions about Ethereum
Ether is the second largest cryptocurrency in terms of market share and its Ethereum network has introduced several innovations that have been widely imitated and expanded by other blockchain technologies – in particular smart contracts and support for decentralized third-party applications.
However, this system remains the source of much confusion; many people are not sure about the Ethereum relationship with the applications of its blockchain support, with the myriad of tokens that use the ERC-20 standard and with the increase in the legal control that has affected other blockchain technologies.
The full breadth of this powerful system goes beyond the scope of this article – a recent article on Wired Magazine called Ethereum "the new wild west of coding" – but we can still clarify some common misconceptions about the platform.
Ethereum Vs. Ether
Many people mistakenly refer to Ether as Ethereum, but the two are not synonymous; Ethereum is a blockchain-based virtual machine that supports intelligent contracts and can be used by decentralized applications, while Ether is the cryptocurrency used by the platform.
Ether is required by applications that use the virtual machine as a "gas" payment to mitigate superfluous calculations, but it is also an extremely popular cryptocurrency that has grown immensely in value since its release. Ethereum currently supports thousands of decentralized applications, which can execute smart contracts – agreements coded as computer algorithms that can handle a virtually unlimited variety of resources, conditions and actions in a time-sensitive way.
Ethereum & # 39; s decentralized applications essentially lease the memory and processing power from the distributed network of computers that run the virtual machine, resulting in a truly leaderless network that can not be censored, not even by its creators.
The ERC-20 standard is a set of rules that cryptocurrency tokens must implement to be used in programs running on the Ethereum virtual machine. Thousands of tokens were created using this standard, which defines six functions that must be able to run correctly, regardless of the computer language used to achieve this goal.
These tokens can then be used as internal currencies for applications or exchanged as their own resources, but require a portfolio designed for Ether and are generally not listed in public exchanges. During the boom of the cryptocurrency in 2017, many ERC-20 tokens were released that lacked a solid business model, and some were even explicitly scammers, but many others are integrated with genuinely innovative projects.
Ethereum is demonstrably secure. Network Although some applications developed to use its distributed computing capabilities have been the victims of notable security breaches, the system itself has never been compromised and its developers have compared these occurrences to a website, rather than the Internet itself, compromised.
Most of the code that runs the applications of Ethereum is open source and an international network of developers is thrilled to maintain its integrity.
Regulation and volatility
Many cryptocurrencies, including Ethereum, have seen an extraordinary increase in value in 2017, but during that year they were also subject to a much wider regulatory control, and in fact it was a series of new regulations in China and South Korea that precipitated the most significant loss in value at the end of the year.
Speculators remain unsure whether the late plunge of 2017 had been an explosive bubble or a regular market correction, but they may agree that Ether has weathered the storm better and has many other cryptocurrencies due to its integration with the broader ecosystem of Ethereum applications.
The article quoted in Wired Magazine presents a very interesting point on Ethereum comparing it with the internet in the early years & # 90; is a system that presents an exciting territory and unexplored for programmers, remains unobscured by corporate interests, and is still largely unknown to those who are off the field.
Software developers and entrepreneurs still barely scratched the surface of this remarkable innovation, and it will be interesting to see how it will be applied in the future.