When you think of cryptocurrency a few probably come to mind, Bitcoin, Ethereum, Dogecoin, I mean these are the coins getting all the news coverage and airtime. Today we will discuss one of them, Ethereum, and some of the changes coming to it. First, what is Ethereum? Sure, it’s a crypto – but what is it actually? Well, Ethereum is an intricate software platform that uses blockchain technology. Its currency is an ether, and like Bitcoin, it allows for digital payments through the blockchain platform. However, it’s unique as it’s a programmable blockchain, which means that it can be used as a marketplace for applications that everyone can see. Bitcoin is mainly used for investing purposes, but Ethereum is leading the charge in decentralized finance, which is a term for creating financial items like mortgages on the blockchain, essentially replacing banks and brokerages, who are the current middlemen. This is done through smart contracts, which are self-executing agreements between a buyer and a seller that are stored as lines of code in the Ethereum blockchain.
One of the main issues with Ethereum, as well as most other crypto currencies is the time it takes to mine and in turn – power consumption and the environment as computers race to solve complex math equations. This may be changing after a coding update known as Ethereum Improvement Proposal 3554, or EIP-3554 for short threatens the existence of Ethereum mining as we know it. The proposal has Ethereum switch from a proof-of-work model to a “proof-of-stake” model – making users leverage their existing ether to verify transactions and mint new tokens. The proof-of-stake workflow occurs on a chain called Beacon, but developers have pushed it back due to issues of implementations. Do you think Ethereum will become “proof-of-stake”, and could this be a potential solution to the crypto climate issue?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.