DeFi
September 28, 2022
What is Token Burn and it's effects on price
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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The crypto market has given rise to a lot of cryptocurrencies. Bitcoin and Ethereum are amongst the most popular and ambitious of the lot. These cryptocurrencies have reached heights that very few people must have imagined.
For anything to be successful, there needs to be a good foundation laid to it and in the case of cryptocurrencies, it is their founders that make them as they are. This article will discuss Ethereum, its advantages and disadvantages along with who its founder is and many more things. So stick around to find out.
Ethereum is one the largest blockchains networks. It might only be second to Bitcoin. It offers a lot of features and because it is also one of the oldest networks, a lot of people trust this platform to carry out their crypto trade. It was first described on the white paper in 2013.
A lot of people use Ethereum as it offers a huge amount of cryptocurrencies for trade on its network. You will find that a lot of cryptocurrencies are based on Ethereum. One of the highlights of Ethereum are the smart contracts that it offers.
Ethereum is considered as one of the biggest crypto-communities which is doing significant work in the sector of decentralized applications. Let’s see some of the stats of Ethereum as of 2022.
Ethereum is an upgrade over its predecessor Bitcoin. Ethereum blockchain does share some similarities with Bitcoin blockchain but it is more focused on solving issues present with Bitcoin and provides greater utility to the people.
Like Bitcoin, Ethereum also runs on peer-to-peer protocol. However, one major difference and upgrade over Bitcoin is that the Ethereum blockchain can execute and run smart contracts on its network.
Furthermore, Ethereum blockchain offers a platform and tools to the developers to build and launch decentralized applications aka dApps on the network. The developers can make use of Ethereum Virtual Machine (EVM) and Solidity as coding language to build apps.
Additionally, Ethereum Blockchain also provides utility in the DeFi space and NFT sector. Combining every solution which Ethereum offers, the Ethereum ecosystem is a one stop solution for many businesses and projects.
As previously said, both the cryptocurrencies Bitcoin and Ethereum share the same base technology. Ethereum, when launched, was based on the Proof-of-Work (PoW) consensus algorithm to secure the network. However, the PoW system is not an sustainable option for a major crypto-ecosystem like Ethereum.
There are concerns regarding scalability, sustainability, efficiency and security of the Ethereum network. In order to get over the limitations stated above and to remain in power with newly emerging cryptocurrencies, Ethereum is undergoing an update starting December 2020.
The phase 2 and 3 of Ethereum 2.0 are expected to rollout by the end of 2023. This Ethereum 2.0 update aka Serenity will enhance Ethereum security even further and is expected to add more features for the developer community.
Ethereum makes use of the Keccak-256 hash function based on cryptography algorithm SHA-3 to secure the blockchain. However, this cryptographic encryption has undergone a number of updates since its launch and has sufficiently managed to fulfill the needs of the Ethereum network.
Ethereum is created by the Russian-Canadian Connoisseur of the crypto world, Vitalik Buterin. The founder had a really interesting journey, in the start, he never showed much interest in cryptocurrency. The trauma of World of Warcraft gave him a serious thought about the horrors of the centralized system.
The importance of a decentralized system was set into his mind and he had a clear mind set to get involved in cryptocurrency and try to contribute something to the crypto space. He wrote many blogs for Bitcoin to get tokens.
Working with the magazine for Bitcoin, Buterin got a good understanding of cryptocurrency. He was passionate and went to study Computer Science but dropped his plans in the middle to focus more on his Ethereum project.
He traveled around the globe, met the Bitcoin pioneers and the bitcoin developers helped him but they doubted his project would work and now Ethereum is standing just next to Bitcoin in comparison with market cap size.
Speaking of advantages, there are many short listed in our today’s article. Till date Ethereum has proven to be quite useful and helpful for many users.
Tokenization is the new revolution, especially for graphic designers. Companies or vendors can sell their digital art work and can easily tokanise them on Ethereum. With this rare digital artwork, companies can tokenize their assets in many other ways too.
There are options to tokenize monolithic assets which are real estates. Along with that organization can tokonize assets that are crowdsourced or data managed.
Just like Bitcoin and many other cryptocurrencies, ETH is totally decentralized. You may be aware of the benefits of decentralized networks; users have no central body in between which controls the system and monitors the transactions.
The decentralized system provides total transparency and ensures the security towards users' transactions. The whole system builds trust among the users.
Ethereum is the platform where a team or organization has as many options to get bound with, whereas on other platforms they merely have any options, most consortiums have to stick with a particular vendor. In Ethereum the scenario is opposite.
Ethereum is so flexible because it is designed in a way that encourages coders to develop something that can contribute to the ecosystem and the process is supported by Ethereum Improvement Proposals.
There are very few disadvantages of Ethereum, let’s get started with a couple of them.
Scaling issues can be caused because of many things in Ethereum. The problem starts from the beginning, because Ethereum has its base as a ledger, it has no singular purpose like bitcoin.
The malfunctions occur because Ethereum has a platform for projects like smart contracts and many more, which indirectly give errors to errors and hacks.
Investment in Ethereum is just as risky as you find in other cryptocurrencies like bitcoin. There is a risk factor because of the highly volatile nature of cryptocurrency. The heavy fluctuation in price really disturbs the market and demotivates the investors.
Being the second highest market cap Cryptocurrency, there’s still no way to make it stable on the market. Along with that users have to pay gas fees which are charged quite high. The market fluctuation hits the investors and mostly demotivates the newbies.
Ethereum is one the biggest and oldest blockchain networks and because of that it has a number of advantages as well as disadvantages. If you know your way around the crypto world, you would have no difficulty with your money.
If you are thinking of utilizing your money on the Ethereum network in any way, then make sure you know about it completely beforehand. Knowledge can be your biggest asset but if you have incomplete knowledge, it can be your doom.
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