Exploring Ethereum in depth: What are the pros and cons of using Ethereum blockchain?

Ethereum is one of the most popular public-chain networks through which developers can build decentralized applications (DApps) and smart contracts. The applications developed at Ethereum can be divided into 11 categories, including open finance, decentralized exchanges, games, collectibles, markets, development tools, identity, governance, infrastructure, and registry-token. Registry) and Ethereum ERC certification standards. Ethereum is a leader in the solution of enterprise blockchain solutions.

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Ethereum facilitates peer-to-peer (P2P) transactions by creating a decentralized network (or Web3). Ethereum blockchain technology is changing the P2P economy of the Internet by controlling the technologies and applications we use extensively.

Ethereum has three ways to achieve this goal: first, the cryptocurrency becomes the universal currency of the Internet; the second is to provide users with new functions through decentralized applications; finally, let users control their own data and digital identities. .

The adoption of Ethereum in the real world

Ethereum shows the world how blockchain technology can be practically applied in personal and corporate businesses.

Since its inception in 2015, more than 2,500 applications have been built on the Ethereum blockchain. The Enterprise Ethereum Alliance has more than 450 corporate members, including Microsoft, JP Morgan Chase, Santander, Accenture, Dutch International Group, Intel, Cisco and more.

Implementing Ethereum blockchain technology

Microsoft and Amazon have begun using Ethereum's protocol to enable users to create and manage blockchains through their BaaS platform. Microsoft launched Azure in May 2019, and Amazon launched the Amazon Managed Blockchain in early April. These BaaS platforms can facilitate the development and adoption of Ethereum, as well as access to variants of Ethereum, such as JPMorgan's Quorum blockchain, an open source blockchain platform for enterprise based on Ethereum. So far, the Quorum blockchain has been opened to more than 250 banks worldwide through Quorum's Interbank Information Network (IIN), which is available to many companies through the BaaS platform.

JPMorgan's Quorum blockchain is a private version of Ethereum (or a licensed version), and the public version of the Ethereum blockchain is undergoing a series of major developments. For example, Ernst & Young, one of the Big Four accounting firms, recently released a blockchain protocol called Nightfall. The protocol is a privacy tool based on the zk-snark protocol, which enables large and medium-sized enterprises that require blockchain privacy attributes to be built on the Ethereum public chain.

Why big companies and companies will choose to use Ethereum

Ethereum is the blockchain most used by companies. In Forbes' "Blockchain 50" list, more than 50% of companies with a market capitalization of $1 billion are developing applications through Ethereum or Ethereum's derivative platforms.

The following are the main reasons why these companies choose Ethereum:

  1. First-mover advantage: Ethereum is the first programmable blockchain. It has a Turing-complete language on the blockchain and has the function of intelligent contract.
  2. Ethereum is a cleverly designed project: most cryptocurrencies are spontaneous, but they will soon die out. Compared with other encryption projects, Ethereum's white paper was released in 2013, and Ethereum was officially launched in 2015. It has a long time and high credibility. In order to make the Ethereum blockchain a breakthrough in technology in the next few years, the project has a clear roadmap for expansion, which will gradually expand with the release of Ethereum 2.0 (the main upgrade will be in the next two to three years) Released in four phases).
  3. Ethereum is an open system: the Ethereum public chain is an open system that anyone can join this project. Anyone can develop and improve its ecosystem. Those non-open or private-chain platforms, such as Hyperledger, Hashgraph, Corda, etc., cannot achieve the same network effects as open systems such as Ethereum.
  4. Ethereum supporters: Ethereum has the largest developer community dedicated to the development of Ethereum's blockchain agreements. The Ethereum Business Alliance and Hyperledger are also monitoring and promoting the development of the project.
  5. Privacy transactions: By building a privacy transaction layer on the Ethereum blockchain, companies can achieve privacy. Jorge Chase's Quorum is a good example. In addition, companies can now achieve privacy on the Ethereum public chain through Ernst & Young's Nightfall agreement.
  6. Rapid deployment: Ethereum can be easily used by developers and businesses. One-stop BaaS platforms like Microsoft Azure and Amazon Managed Blockchain, and SaaS platforms like Consesys-supported Kaleido, try to make it easier for companies to develop their own blockchain network by releasing new tools and development kits. .
  7. Interoperability: Companies can develop private/licensed blockchain networks based on Ethereum and embed them in Ethereum's public-chain main network to benefit from Ethereum's public chain and ecosystem. Ethereum's interoperability essentially keeps the enterprise blockchain up to date.
  8. Return on investment: ETH is expected to bring a large return on investment for companies and other types of investors. The adoption of the Ethereum agreement, which promotes the rise in ETH prices, such as Staking, essentially pays dividends to the strakers. In addition, by 2021, the circulation of ETH will also be greatly reduced.

Enterprises adopt the disadvantages of Ethereum

While Ethereum may be the most advanced in enterprise business solutions, it is not the most important. Business concerns about Ethereum include:

  1. Scalability: The main problem with Ethereum is its scalability is too low. The transaction speed on Ethereum is still very slow, because Ethereum's public chain can only handle about 15-20 transactions per second (TPS), while Visa handles 45,000 transactions per second. Businesses need very high transaction throughput, and Ethereum is not able to offer ultra-high transaction speeds on its home network. However, the licensed Ethereum blockchain is not subject to trading speed limits. Therefore, Ethereum has solved this problem to a certain extent, because companies can develop these Ethereum private chains and connect them when the Ethereum public chain expands. Earlier this month, Ethereum co-founder Vitalik Buterin suggested using Bitcoin Cash's blockchain as an extended interim solution that would help solve the scalability problem of the Ethereum network. 125c3e72a8cb61e0c4c71b87a1588e3b (Source: Cointelegraph)
  2. Uncertainty: Another major disadvantage of Ethereum's adoption of the company is that its projects are still under development and some system failures may occur during the development process. For example, in order for Ethereum to be scalable, its consensus agreement must transition from a Proof of Work (PoW) to a Proof of Entitlement (PoS) in an Ethereum 2.0 upgrade. This is a very big change. If the progress is not good, then the whole system may collapse.
  3. Competitors: Although Ethereum is a leader in enterprise blockchain adoption, it is competing with other blockchain agreements that claim to be more scalable than Ethereum. These competitors include EOS, Cardano, Stellar, Neo, TRON and more. In addition, Ethereum's competitors will include new blockchain agreements that have not yet been launched, such as Hedera Hashgraph, Polkadot and Telegram Open Network (TON).

Ethereum 2.0: How it will change the interaction between business and ecosystem

At present, Ethereum's blockchain technology has many problems and limitations, including interoperability, economic and transaction scalability, security, stability, governance and so on. The Ethereum development team is working through the upgrade of Ethereum 2.0 to completely resolve the issues.

As Buterin said:

If Ethereum 1.0 is a group of enthusiastic people trying to build a world computer, then Ethereum 2.0 will create a world computer.

In order to make Ethereum a “world computer”, three major parts will be introduced to help the protocol upgrade success and become the standard adopted by enterprises:

  1. Switch from the energy-intensive PoW consensus algorithm to the PoS algorithm. Holders of Ethereum can use at least 32 Ethereum for staking. This will allow more participants to join the network, making Ethereum 2.0 more decentralized, resilient and secure.
  2. A network-wide, second-tier extension solution, such as fragmentation technology, will allow Ethereum transactions to be performed on a parallel sub-chain. The expansion solution will be combined with Plasma to enable Ethereum to handle larger transaction volumes – “tens of thousands of decentralized transactions per second.”
  3. The Ethereum Virtual Machine (EVM) is the engine responsible for deploying DApps on the blockchain, which will be completely modified and run on a new programming code called WebAssembly (WASM). This partial upgrade will increase the overall speed, availability and security of Ethereum.

In addition, Ethereum 2.0 has 7 different stages. The first three phases: Phase 0 Beacon Chain, Phase 1 Basic Sharding and Phase 2 eWASM will take at least a year and a half to complete and is expected to be released in early 2020. This means that the delivery time of Ethereum 2.0 may be very long, and we expect this upgrade process to slow down.

The actual application of the Ethereum agreement covers 11 major categories of business that may be of interest to the business. Ethereum's large developer community is committed to improving blockchain agreements, and companies can view them as technological advantages. However, Ethereum faces problems such as delayed renewal, low scalability, increasing competitors, and growth.

The blockchain sector is still in its very early stages, and anyone can be the final winner.