Ethereum: The Future of Digital Currency

by Saransh Raina, Staff Writer, The Pawprint

What is Ethereum?

Ethereum is a digital currency blockchain company that launched on July 30th,2015. Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization. Ethereum is presently working on transitioning to a proof-of-stake model, also known as Ethereum 2.0, which will radically affect the rewards system. The current proof-of-work model does not cooperate and does not penalize malicious behavior. In the proof-of-stake model, transaction auditors will take the place of miners. There would be no more algorithmic puzzles to solve. Validators must own ether, and to validate a block, they must put their ether stake on the line to authenticate that the block is valid in smaller terms meaning the specialist of the transaction has to approve your withdrawal,  deposit, or transfer of funds privately. If Ethereum 2.0 is successful, the blockchain’s payment capacity will be significantly increased.

Why Digital Currency is the future

 Digital currencies like Bitcoin usually build headlines for the huge swings in their value, however on the far side the intrigue of skyrocketing and plummeting costs the rising quality of cryptocurrencies poses serious queries for money establishments and monetary policy. Payments can be completed much faster with digital currency than with traditional methods such as ACH (automated clearing house) or wire transfers, which can take days for financial institutions to confirm a transfer of funds. Existing capital transfers frequently take longer on weekends and after regular business hours because banks are closed and cannot confirm transactions. Transfers with online currency occur at the same rate 24 hours a day, 7 days a week.

Relativity  The price of bitcoin, as well as the price of ether, is a major determinant of the overall cryptocurrency market picture. The two are positively correlated, which means that when bitcoin rises or falls, so does ether. Because most DeFi, (Decentralized Finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilizes smart contracts on blockchains, the most common being Ethereum)  projects are built on the Ethereum blockchain, ether’s price surged to its highest level in more than two years during the market’s explosive Defi boom in summer 2020. Bitcoin was struggling to break a similar two-year record at the time. With the bitcoin price rally at the tail end of 2020, there was a BTC-to-ETH price rotation, with investors viewing Ethereum, and more specifically the Defi applications built on it, as a beneficial complement to bitcoin.  As measured by two key metrics, Ethereum differs from bitcoin. Ethereum block times are currently between 10 and 15 seconds, compared to bitcoin’s 10 minutes; additionally, an ether transaction will appear in about five minutes, whereas bitcoin takes approximately 40 minutes to complete a transaction. This is because the priority of bitcoin is security. Because of its coding language and restricted commands, it is more difficult to hack the blockchain, leading to a longer transaction time.