Macro
Federal Reserve Chairman Powell made hawkish remarks, stating that Bitcoin will not be considered a national currency reserve, which is bearish for Bitcoin (virtual currency is not legal tender).
Micro
Ethereum has reached peak market value and is now fully unlocked.
Ethereum is an open-source public blockchain platform with smart contract functionality. Here is an interpretation of it:
Core Technology
- Smart Contracts: The core technology of Ethereum is smart contracts, which are self-executing protocols supporting programming logic to complete transactions or operations. Users can decentralizedly create and run various applications, such as finance, gaming, authentication, etc.
- Ethereum Virtual Machine: EVM is the core execution environment of Ethereum, responsible for running smart contracts, executing smart contract code, and generating deterministic results. All nodes run EVM to ensure blockchain state consistency. Smart contracts are mainly written in Solidity, which EVM compiles into bytecode for execution.
- Consensus mechanism: Ethereum initially adopted the proof-of-work (PoW) mechanism, with miners competing for block rewards through computational power. After completing the 'Merge' in September 2022, it switched to a proof-of-stake (PoS) mechanism, where validators stake ETH to participate in verification, significantly reducing energy consumption compared to PoW.
Application Scenarios
- In the financial sector: It can be used to build digital currency exchanges, lending platforms, insurance systems, etc., such as Uniswap, Aave, Makerdao, and other decentralized financial platforms.
- In the Internet of Things (IoT) sector: Through smart contracts, IoT devices can automatically execute tasks, exchange data, and make payments, enabling more efficient and secure IoT applications.
- In the gaming and entertainment sector: Various types of games and entertainment applications can be developed, such as virtual reality and augmented reality games, social media platforms, etc., utilizing smart contract functions to automate game rules and social interactions.
- Other sectors: It can also be applied in copyright management, supply chain tracking, healthcare, and many other fields.
Development History
- 2013: Vitalik Buterin proposed the concept of Ethereum and wrote the Ethereum white paper.
- 2014: Gavin Wood published the Ethereum yellow paper, detailing the technical design of the Ethereum Virtual Machine; the Ethereum project conducted a 42-day presale for Ether.
- 2015: The Ethereum mainnet officially launched, entering the forefront phase, mainly aimed at developers.
- 2016: Entered the homestead phase with significant updates, eliminating the Canary contract; that same year, The DAO was attacked due to a code vulnerability, prompting the community to implement a hard fork, splitting into Ethereum and Ethereum Classic chains.
- 2017-2019: Entered the metropolis phase with multiple key updates, including the Byzantium update, Constantinople update, and Istanbul update, promoting the development of Ethereum's functionality.
- 2020-2024: Entered the Ethereum 2.0 phase, initiating phase 0 at the end of 2020, launching the beacon chain; on September 15, 2022, Ethereum underwent a merge upgrade, transitioning from proof-of-work to proof-of-stake.
Advantages and Disadvantages
- Advantages: Ethereum's smart contract functionality automates transactions and business processes, reducing human intervention and intermediaries, improving efficiency and accuracy; as a decentralized platform, it has no single point of failure or centralized control, providing higher security and resistance to censorship; supports multiple programming languages and rich development tools, lowering the development barrier and attracting a large number of developers; has a large and active community that continuously promotes technological innovation and ecosystem development.
- Disadvantages: Each node in the Ethereum network needs to process and verify all transactions and smart contracts, leading to increasing network congestion as users and applications grow; once deployed, smart contracts are difficult to modify and upgrade, posing security risks; regulatory policies for the cryptocurrency market are unclear, creating uncertainty regarding Ethereum's legal status and compliance; its price volatility poses certain risks for investors and users.
Differences from Bitcoin
- Purpose and function: Bitcoin primarily serves as a decentralized digital currency for value storage and peer-to-peer transaction payments; Ethereum is not only a digital currency but also a platform supporting smart contract and decentralized application development, aiming to achieve broader decentralized application scenarios.
- Technical architecture: Bitcoin uses the UTXO model, where transaction records are based on unspent transaction outputs; Ethereum uses an account model, where each account can store ETH balance, code, and data. Bitcoin's scripting language is relatively simple, mainly used for transaction verification; Ethereum supports Turing-complete programming languages like Solidity, enabling more complex smart contract logic.
- Consensus mechanism: Bitcoin has always used the proof-of-work mechanism; Ethereum has transitioned from proof-of-work to proof-of-stake mechanism.
Technical Aspects
Ethereum's trend is not as perfect compared to Bitcoin, perhaps there is an opportunity for a rebound.
Bitcoin has exited a perfect trend in technical aspects, approaching the end of the trend.
