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 November 3, 2019 23:33 Hong Kong, China Many friends ask: What is Ethereum?Today I will explain it clearly to you in plain English. 1. Bitcoin vs EthereumTo understand Ethereum, you must first talk about Bitcoin. Bitcoin: Nokia that can only transfer moneyBitcoin is the first blockchain born in 2009: Function: Just do one thing - transfer money. Just like a Nokia phone: • Can make calls and send text messages • Durable leather • But for these functions, you cannot install apps Bitcoin Limitations: • Only 7 transactions can be processed per second • Transfer takes 10 minutes to 1 hour • Apart from transferring money, I can’t do anything else. Ethereum: an iPhone that can install appsEthereum was invented by a Russian guy named Vitalik in 2015. His thoughts: Can I run programs on the blockchain? Just like an iPhone can install apps. The code is written on the blockchain and will be executed automatically when the time comes, and no one can change it. This is a smart contract. 2. Dapp: decentralized applicationOn Ethereum, developers can develop various applications: Uniswap (decentralized exchange) • There is no boss, the code runs automatically • You can trade various coins • No need to register an account, you can use it even with your wallet OpenSea (NFT Market) • Buy and sell digital art • Transaction records are on the chain • The platform is closed, but your NFT is still there Aave (lending platform) • Deposit your coins and earn interest automatically • Or mortgage loan, no bank approval required Various games • The equipment is NFT and really belongs to you • Can be sold to others for money • Even if the game is closed, the equipment can still be transferred to other games. 3. DAO: Decentralized OrganizationImagine a company, but with no boss and no board of directors: • Rules are written in smart contracts • All decision making community votes • Income is automatically distributed to contributors Just like a robot company, it runs automatically and does not require human management. 4. DeFi: decentralized financeTraditional finance: • Deposit money in the bank and the bank will give you 1% interest • The bank lends the money and charges 15% interest • The middle 14% was earned by banks DeFi: • You lend money directly to people who need it • Smart contract automatic matching • No middlemen make the difference At the peak of DeFi in 2021, the amount locked will exceed US$200 billion. 3. How does Ethereum work?1. Gas FeeDoing anything on Ethereum requires paying a "gas fee": • Transfer: Gas required • Buy NFT: Gas required • Playing games: Gas required Why Gas? Because your transaction needs to be calculated and recorded by thousands of computers around the world, they will charge a fee. It's like paying for shipping by express delivery. Problem: Gas charges are sometimes very expensive. Bull market in 2021: • Transfer: 50-100 yuan • Buy an NFT: several hundred yuan • Play a game: Thousands of dollars This is why Layer 2 was later developed (will be discussed in the next issue). 2. Ethereum (ETH)The "gasoline" of Ethereum is Ethereum (ETH): • Everything you want to do on Ethereum must be paid with ETH • ETH can also be invested and traded • In 2021, the price will rise to more than 30,000 yuan per piece. The difference between ETH and Bitcoin: 3. Miners and validatorsPreviously (before September 2022): Mining • Miners use graphics cards to mine (POW) • Do the math and get the package deal right • Very power consuming Now (after September 2022): Staking • Pledge 32 ETH to become a validator (POS) • Verify transactions and earn rewards • Save 95% of electricity This upgrade is called "The Merge" and is the largest upgrade in the history of Ethereum. 4. Ecology of EthereumDevelopers’ favorite blockchain70% of the world’s blockchain developers develop on Ethereum: • 3000+ Dapps • 1 million+ daily active users • Value locked up is US$50 billion+ Various tokensOn Ethereum, anyone can issue tokens: Utility tokens: • UNI (Uniswap’s governance token) • LINK (Chainlink’s oracle token) Stablecoins: • USDT (Tether, 1USDT=1 US dollar) • USDC (USD stablecoin issued by Circle) Air coins: • A lot of coins issued by various scammers have returned to zero. 5. Problems with Ethereum1. Too slow• Only 15-30 transactions can be processed per second • Alipay can handle tens of thousands of transactions per second • WeChat can handle hundreds of thousands of transactions per second As soon as the bull market arrives, it is extremely congested. 2. Too expensiveGas fees are ridiculously high: • Transfer: dozens of yuan • Buy an NFT: several hundred yuan • Small transactions are simply unaffordable 3. High threshold for novices• Mnemonic phrase, private key, gas fee • If an operation fails, the money is gone • There is no customer service, you can’t find anyone if you have a problem 4. Many competitorsChallenges of other public chains: • Solana: claims 50,000 transactions per second • BSC: The handling fee is only a few cents • Avalanche: fast and cheap However, these chains are either not decentralized enough, or their ecosystem is not as good as Ethereum. 6. Ethereum’s upgrade routeButerin and the development team have been upgrading: Completed✅ The Merge (Merger, September 2022) Change from POW mining to POS staking, saving 95% of electricity. in progress🔄 Danksharding (sharding) Split a chain into many pieces and process them in parallel to speed up the chain 100 times. 🔄 Layer 2 Take a fast lane on Ethereum and reduce the handling fee by 100 times. (Focus on the next issue) Target• Process 100,000 transactions per second • Gas fee reduced to a few cents • Stay decentralized and secure 7. Ethereum vs. other public chains
Advantages of Ethereum: • The safest and most decentralized • The richest ecology • Most developers Disadvantages: • Slow and expensive That’s why Layer 2 is needed to solve it! 8. How do ordinary people use Ethereum?Step 1: Prepare your walletDownload MetaMask (Little Fox Wallet): • Install plug-in for Chrome browser • Mobile App • Remember mnemonics for 12 English words Important: Do not leak the mnemonic phrase, which is equivalent to bank card + password. Step 2: Buy some ETHBuy on exchanges (Binance, OKX, Coinbase): • Buy ETH for a few hundred dollars • Withdraw to your wallet address Step 3: Experience DappUniswap (exchange): app.uniswap.org, you can use it even with your wallet. OpenSea (buy NFT): opensea.io, check out the digital artwork. ENS (domain name): Give your wallet a name that is easy to remember, such as zhang.eth. 9. Safety tips❌ Don’t reveal your mnemonic phrase Anyone who asks for your mnemonic phrase is a liar, including "customer service". ❌ Beware of phishing websites Only use official URLs and don’t click on unknown links. ❌ Don’t authorize indiscriminately Check the authorization content clearly when connecting to the wallet. ❌ Don’t invest randomly 99% of projects will return to zero. ✓ Small amount experience Spend a few hundred dollars first to get familiar with the process. SummarizeWhat is Ethereum? A blockchain that can run smart contracts is like the iPhone in the blockchain world. What can you do? Dapp, DeFi, NFT, DAO, are much more powerful than Bitcoin. What are the advantages? The safest, most decentralized, and richest ecosystem. what is the problem? Slow and expensive, it is being solved through Layer 2. Why is it important? 70% of blockchain applications run on Ethereum, which is the infrastructure of Web3. Ethereum is not used for currency speculation, but for building a decentralized world. Just like the Internet is not used to speculate on domain names, but to connect the world. If you understand Ethereum, you understand half of the entire Web3.  If you find it useful, click "Looking" to support it! |
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