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Ethereum (ETH)

Maxbit Support
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What is Ethereum (ETH)?

Ethereum (ETH).png

  1. Native Blockchain:
    • Ethereum operates on its own native blockchain, which, similar to Bitcoin, is a decentralized, distributed ledger. However, what sets Ethereum apart is its ability to run decentralized applications (DApps) and smart contracts.
  2. Consensus Protocol:
    • Ethereum originally used a Proof-of-Work (PoW) consensus mechanism, similar to Bitcoin. However, Ethereum is in the process of transitioning to Ethereum 2.0, which will operate under a Proof-of-Stake (PoS) consensus mechanism called the Beacon Chain.
  3. Trilemma (Security, Speed, Scalability):
    • Security: Ethereum's PoW and the upcoming PoS mechanisms ensure network security.
    • Speed: The Ethereum blockchain produces a block approximately every 13 seconds, making it faster than Bitcoin. However, confirmation times can vary.
    • Scalability: Ethereum has faced scalability challenges, leading to the development of Ethereum 2.0, which aims to increase the network's transaction throughput with sharding and other techniques.
  4. Founder / Date Founded:
    • Ethereum was proposed by Vitalik Buterin in late 2013. Development was crowdfunded in 2014, and the network went live on 30 July 2015.
  5. Objective / Use Case:
    • Ethereum was developed to be a platform for decentralized applications (DApps) and smart contracts, which are self-executing contracts with the agreement between buyer and seller being directly written into code.
  6. Total supply/ Limit or Unlimited:
    • Ethereum does not have a hard supply cap like Bitcoin. The total supply of ETH is determined by its issuance rate, which is influenced by network upgrades and consensus mechanism changes (like the transition to Ethereum 2.0).
  7. Supply Deflation:
    • With the introduction of EIP-1559 in the London Hard Fork in 2021, Ethereum introduced a base fee burn mechanism, which means that a portion of the transaction fees is burned (destroyed) rather than being given to miners/stakers. This burning mechanism has the potential to lead to periods of deflation for Ethereum, especially during high transactional activity.

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