This article is about Ethereum, advantages and disadvantages of it as being a decentralized system, fully autonomous and not controlled by anyone. It is being run by lots of of volunteers’ computers around the world, which means it never goes offline. Moreover, users’ personal data stays on their own computers, while content, such as apps, videos, etc., stays in full control of its creators without having to obey by the rules imposed by hosting services.
It is important to understand that despite constantly compared to each other, Ethereum and Bitcoin are two completely different projects with different goals. Bitcoin is the first cryptocurrency and a system to transfer money, built on and supported by a distributed public ledger technology called the Blockchain.
Ethereum took the technology behind Bitcoin and expanded its capabilities. It is a whole network, with its own Internet browser, coding language and payment system.It also enables users to create decentralized applications on Ethereum’s Blockchain.
Those applications can be completely new ideas or decentralized reworks of already existing concepts. This essentially cuts out the middleman and all the expenses associated with the involvement of a third party.
As said, Ethereum is a decentralized system, which means it utilizes a peer-to-peer approach. Every single interaction occurs between and is supported only by the users taking part in it, with no controlling authority being involved.
The whole Ethereum system is supported by a global system of ‘nodes.’ Nodes are volunteers who download the entire Ethereum’s Blockchain to their computers and fully enforce all the consensus rules of the system, keeping the network honest and receiving rewards in return.
Those consensus rules, as well as lots of other aspects of the network, are dictated by ‘smart contracts.’ Those are there to automatically perform transactions and other specific actions within the network with parties that you don’t necessarily trust. The terms for both parties to fulfill are pre-programmed into the contract. The completion of these terms then triggers a transaction or any other specific action. It is believed that smart contracts are the future and will replace all other contractual agreements, as the implementation of smart contracts provides more security and reduce transaction cost.
Moreover, the system also provides its users with the Ethereum Virtual Machine (EVM), which essentially serves as a runtime environment for smart contracts based on Ethereum. It provides users with security to execute an untrusted code while ensuring that the programs don’t interfere with each other. EVM is entirely isolated from the main Ethereum network, which makes it an ideal sandbox-tool for testing and improving smart contracts.
The platform also provides a cryptocurrency token called ‘Ether.’
Advantages of Ethereum:
Ethereum platform benefits from all the properties of the Blockchain that it runs on. It is immune to any third party, which means that all the decentralized apps and DAOs deployed within the network can’t be controlled by anyone.
Any Blockchain network is built on a principle of consensus, meaning that all the nodes within the system need to agree on every change made within it. This eliminates fraud, corruption and makes the network tamper-proof.
One of the most important advantages of Ethereum is that the whole platform is decentralized, which means there is no possible single point of failure. So all the apps will always stay online and never switch off. Moreover, the decentralized nature and cryptographic security make the Ethereum network protected against possible hacking attacks and fraud.
Disadvantages of Ethereum:
One of the most important advantages of Ethereum is that despite the fact that smart contracts are meant to make the network fault-proof, they can only be as good as the people writing the code for them. There can always be human error, and any mistake in the code might get exploited. If that happens, there is no direct way to stop a hacker attack or an exploitation of said mistake. The only possible way of doing so would be to reach a consensus and rewrite an underlying code. However, this goes completely against the very essence of the Blockchain, as it is supposed to be an unchangeable and immutable ledger.