Because Revix believes that Friday, the 13th is a day of good luck, the company has decided to share knowledge in this article about one of the top-performing cryptocurrencies: ethereum, or ether. Here, Revix busts some myths about the world’s second largest crypto.
1. Ethereum does not have errors or failures
We often hear a common myth about ethereum being a cryptocurrency that is 100% free of failure or error. This is not the case. The Ethereum blockchain, like other blockchains, is not impenetrable. But it is growing in security each day. As the Ethereum network continues to grow at a rapid rate, so, too, does its security and robustness. To date, Ethereum is yet to have a fully compromising attack against it.
2. Ethereum has no protection against attacks
There are three vital elements that form the basis of this protection characteristic: resistance to attack, fault tolerance and resistance to collusion:
- Fault tolerance: Decentralised systems are less likely to fail accidentally because they rely on many separate components that are not likely to fail.
- Attack resistance: Decentralised systems are more expensive to attack and destroy, or manipulate, because they lack sensitive central points that can be attacked at a much lower cost than the economic size of the surrounding system.
- Collusion resistance: It is much harder for participants in decentralised systems to collude to act in ways that benefit them at the expense of other participants, whereas the leadership of corporations and governments collude in ways that benefit themselves but harm less well-coordinated citizens, customers, employees and the general public all the time.
Like all decentralised networks, Ethereum uses these elements to protect itself and continues to improve its defence against attacks.
3. Ethereum is fully decentralised
For the sake of this analysis, we’ll broadly define a centralised blockchain as follows: an environment where a single actor, or a handful of actors, can exert unilateral control over the platform’s day-to-day functioning and ongoing development. Under this definition, Ethereum, like the bitcoin blockchain, is a decentralised network with validators and miners worldwide.
4. Ethereum is more valuable than bitcoin
No. Ether is currently valued at about US$360-billion, while bitcoin is valued at about $833-billion.
5. Ethereum is backed by precious stones
This is not the case. Ethereum is not backed by any form of precious stones or gold like substances. The Ethereum symbol, the octahedron, represents the element of air and is linked to the heart chakra, which is the centre for love and compassion. It has nothing to do with precious stones.
6. Vitalik Buterin is Satoshi Nakamoto
Unfortunately, no. The identity of bitcoin creator Satoshi Nakamoto is still unknown. Yet the founder and creator of Ethereum is known: His name is Vitalik Buterin.
7. The newest Ethereum upgrade (EIP-1599) makes it fee-free
This is a misconception about the EIP-1559 upgrade to Ethereum. Its main function is to make transaction fees less volatile and more predictable by creating an algorithmic model to automatically adjust costs by a factor of 1.125x, at most, per block. This upgrade will help smart-contract developers better build applications with a more reliable future fee structure.
Under the current blind, auction-like system for determining fees on the Ethereum blockchain, the costs for sending a transaction can skyrocket at a moment’s notice depending on the ups and downs of the crypto markets. Under EIP-1559, fees are regulated to increase and decrease based on the use of block space.
8. EIP-1559 will make Ethereum’s monetary policy more predictable
EIP-1559 introduces a fee-burning mechanism that will permanently remove coins from the total circulating supply of ether. The reason for burning the base fee rather than distributing them to ether miners is to ensure there is no financial incentive for miners to artificially congest the network and keep the base fee high. Because of this burning mechanism, EIP-1559 may strengthen a bitcoin-like narrative of limited supply to the investment case for ether.
It is difficult, however, to predict exactly how much ether will be burnt over time. If more ether is burnt this way than is issued, it will make ether deflationary. While this burning is a counterbalance against an ever-increasing ether supply, it doesn’t make ether’s long-term monetary policy more stable. Yet it will make it more favourable due to the decrease in inflationary pressures.
9. Ethereum is the most popular crypto among institutions
While bitcoin is still the most popular cryptocurrency, ether is catching up — and making a name for itself. With the evolution of smart contracts and the world of DeFi (decentralised finance), the Ethereum blockchain is gaining much-deserved popularity from more institutions as time goes on, and these areas continue to grow exponentially.
10. Ether uses more energy to be mined than bitcoin
Ethereum uses less energy than bitcoin to keep the network secure (through mining). Digiconomist estimates that ethereum miners currently consume 61TWh/year, while bitcoin miners use 146TWh/year. However, the Ethereum 2.0 upgrade to PoS (“proof of stake”) will make Ethereum about 2 000 times more energy efficient based on the conservative estimates, which will result in a reduction of at least 99.95% in total energy use.
11. Cardano will soon take ethereum’s place in the market
While no one can know where this will happen, cardano is a competitor to ether that is looking at solving a couple of the latter’s current drawbacks, such as scalability, high fees and energy consumption. Cardano is the fifth-largest cryptocurrency at the of writing.
12. Vitalik Buterin is an extraterrestrial
This is most likely not true, but who really knows?
13. It is complicated to buy or invest in ethereum
Investing in cryptocurrencies like ether has been made easy by many platforms. One such platform is Revix, which makes investing in cryptocurrencies and crypto bundles as simple as one click. There are no complicated trading graphs or limit orders; Revix simply offers the best execution that gets you the best prices at the click of a button.
Now that you know more about ethereum, and the Ethereum blockchain, do not miss the chance to know more about signing up for free at Revix.
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