Ethereum: the basis of the new web and the future of the Internet?
Ethereum: the basis of the new web and the future of the Internet?
Interested in an ether blockchain fired last year as developers turned to it to create various decentralized financial projects and digital tokens called non-fungible tokens (NFTs).

The boom has created a powerful net effect, as increased activity draws more and more developers to Ether. This could make it the platform for web 3.0, where a host of decentralized applications may one day challenge Big Tech's offerings.

“60% to 70% of the industry is powered by a development of ethereum, ” says Sandeep Nailwal, co-founder of Polygon, one of the many companies that trade in currencies. As a result, the price of the digital currency ethereum multiplied by nine. The value of the featured ether tokens is $ 350 billion, more than 40% of the value of bitcoins, and the percentage has more than doubled in the year.

But there are still fundamental questions about whether Ethereum, which is far behind in its technical updates, will be able to compete with more agile rivals and whether there is consensus on its long-term role. Until there is an answer to this question, it is likely that the price of ethereum tokens is volatile.

The increase in the price of Ethereum is due to two hopes. One is that it has entered a new phase where the number of tokens in circulation will increase much more slowly than before or even decrease. In fact, the offer has already been reduced after a change last month in the way of validating transactions on the network. Some of the tokens that were previously paid as commissions to people who validate transactions are being destroyed.

Another big step could occur later this year or early next when the current "proof of work" system is replaced, which consists of coin miners contributing their computing power to the network in exchange for receiving cash. ethers - by "proof of stake", in which validators deposit on the development of ethereum network. This change has important monetary implications.

At the end of last year, a gambling test chain was launched. Approximately 6% of the ether supply has already been deposited there by its holders to support transactions, thus obtaining an annual return of up to 5%. This is an indication of the amount of ether that will be out of circulation once the transition is complete.

different bitcoin, ethereum was not created with a clear monetary vision nor was there an upper limit on the number of tokens that could be created. But a big reduction in the supply of tokens could change that, making it more attractive to investors. Its creator, Vitalik Buterin, stated that it will adapt to the needs of its users, as changes are made to the way in which tokens are created and therefore to its long-term offering.

The second hope is that ether is a fundamental part of the infrastructure due to its function of “smart contracts”, software code that runs automatically when certain conditions are met and that allows decentralized financial projects to be carried out.

Despite the fact that its network capacity is very limited. As its maximum capacity is only 15 transactions per second, in times of high activity, the rates of use are high, so only the highest value transactions can be carried out. This is one of the reasons why new blockchains emerged. increased processing power, Avalanche, Solana and Cardano, received a lot of support and played a much bigger role in the network this year, according to Buterin, but they still need to prove themselves. The price of tokens on the Solana blockchain has more than quadrupled since the beginning of August as it has become the platform of choice for selling new NFTs.

But despite Ether's limitations, its supporters claim that its leadership in smart contracts will be unassailable, given the sheer number of developers already building applications with it. Strong blockchain programming language. Also, to attract more developers, most new blockchains allow them to run their applications on 'ethereum virtual machines', thus maintaining demand for ethereum and guaranteeing transactions.

Another mechanism to reduce the transaction processing burden is 'layer two' networks like Polygon: they process transactions on their own networks and then bundle and host them on the ether blockchain as a single transaction.

For your part, Ether plans to implement a series of new functions in its network. One is the switch to test bets. Another consists of “fragmenting” the network, that is, dividing it into 64 separate but interconnected parts, which reduces the pressure on each node of the network by not having to validate each transaction. Buterin says he is also working on other changes to reduce the load and that within two years some of them will have significantly increased the capacity of the network.

However, given the uncertainty about the role that ethereum will play in the long term, investors are warning that cryptocurrency markets could be about to undergo a turn that would see Bitcoin once again in unquestionable dominance.