Ethereum Blockchain: Decentralized Finance and the Future of Digital Value Systems

Chapter 1: Ethereum

Ethereum is a blockchain that is decentralized and has the capability of providing smart contracts. The native cryptocurrency of the site is given the abbreviation ETH, which stands for ether. Ether is the second most valuable cryptocurrency in terms of market capitalization, surpassed only by bitcoin. This is software that is open-source.

Vitalik Buterin, a computer programmer, came up with the idea for Ethereum in 2013. The names Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin are also included among the company's founders. 2014 saw the beginning of development work, which was supported by the general public, and the network became live on July 30, 2015. Ethereum makes it possible for anyone to deploy decentralized applications upon it, such that users can interact with those applications. Financial instruments that do not directly rely on financial intermediaries such as brokerages, exchanges, or banks are made available by applications that fall under the category of decentralized finance (DeFi). This enables the borrowing of funds against bitcoin assets or the lending of cryptocurrency holdings for interest. Users of Ethereum are also able to generate and trade non-fungible tokens, also known as NFTs. NFTs are tokens that can be linked to specific digital assets, such as photographs, and can facilitate transactions between users. The ERC-20 token standard is used by a large number of different cryptocurrencies, which are built on top of the Ethereum blockchain. These cryptocurrencies have also used the Ethereum platform to conduct initial coin offerings.

By implementing an update known as The Merge on September 15, 2022, Ethereum made the shift from proof-of-work (PoW) to proof-of-stake (PoS) as its consensus method. This resulted in a reduction of the blockchain's energy consumption by 99%.

In a white paper that was published in late 2013, Vitalik Buterin, a programmer and co-founder of Bitcoin Magazine, provided an explanation of how to construct decentralized applications. This was the first time that Ethereum was detailed. Buterin argued to the developers of Bitcoin Core that blockchain technology could be useful for applications other than monetary transactions, and that it required a more robust language for application development. This would allow for the possibility of linking real-world assets to the blockchain, such as stocks and property. On the Colored Coins project, which was undertaken in 2013, Buterin collaborated with Yoni Assia, the CEO of eToro, for a short period of time. Together, they authored the white paper that outlined further applications for blockchain technology. Nevertheless, after he was unable to reach a consensus over the manner in which the project should proceed, he advocated the creation of a new platform that would later become Ethereum. This new platform would have a more robust scripting language, which would be a Turing-complete computer language.

The announcement of Ethereum took place in January 2014 at the North American Bitcoin Conference, which was held in Miami. During the course of the conference, Gavin Wood, Charles Hoskinson, and Anthony Di Iorio, who was the one who provided funding for the project, rented a house in Miami with Buterin so that they could have a more comprehensive understanding of what Ethereum may potentially become. For the purpose of bearing witness, Di Iorio invited his buddy Joseph Lubin, who in turn invited reporter Morgen Peck. After the event, Peck wrote an article about it for the publication Wired. Six months later, the founders got together once more in Zug, Switzerland, and Buterin informed them that the project would be carried out as a non-profit organization. Following his departure from the project at that time, Hoskinson went on to establish IOHK, a blockchain business that is responsible for Cardano