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Author: https://twitter.com/guiribabrb
Original Article: https://odysee.com/@ShapeShiftDAObr:a/ethereum-ptbr:d
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# The innovative horizon of Ethereum
In 2013, Vitalik Buterin was fascinated with Bitcoin technology and saw a lot of potential in the technology used by Satoshi to develop it. However, the developer not only intended to replicate the technology, but turn it into the most sophisticated and add more functions to its use.


Based on his idea, Vitalik, along with the team of developers, would build one of the most important technological milestones in the crypto universe: Ethereum. Together with minds like Gavin Wood - founder of Polkadot and Kusama - and Charles Hoskinson - CEO of Cardano -, the programmers have built a decentralized computing infrastructure to build and execute smart contracts, on which decentralized applications can be developed and deployed.

Despite being part of the daily life of many cryptonatives today, **these ideas were taken in 2014**.

In order to put into practice the creation of this new blockchain, Vitalik released in 2013 the Ethereum [whitepaper](https://web.archive.org/web/20140208030136/http://www.ethereum.org/), explaining his intentions in the development of Ethereum. In 2014, *Gavin Wood* published the [yellowpaper](https://github.com/ethereum/yellowpaper) containing all technical information and mathematical formulas explaining how the technology would work and the ways found by the developers would be used to implement them. Months later, Ethereum promoted one of the first cryptoassets ICOs: interested in investing in the project, they would give the developers BTC and, in exchange, they’d receive ETH. They managed to raise 14 million dollars.


ICO from Ethereum. 1 BTC at this time [was worth ~560 dollars.](https://web.archive.org/web/20140804235628/https://www.ethereum.org/)

All the money collected in ICO would allow developers of Ethereum to go ahead with implementing  their idea. In July 2015, the first version of their software would be released, called Frontier.

Analyzing this first version, we saw many similarities in relation to Bitcoin. Ethereum also valued transparency, immutability, publicity and consensus building through the proof of work. In this way, the fundamental characteristics of the Bitcoin blockchain were maintained. However, the idea of the developers with the creation of Ethereum was not just to elaborate another blockchain for transaction processing, but to develop an *on-chain* computation.

Because the Bitcoin blockchain doesn't have this purpose, its programming language - known as Script - can’t process codes endowed with great complexity. This limitation was intentional, to keep the network robust and focused on processing user transactions.

Thus, Ethereum developed in-house solutions to provide a secure environment to turn it into a computational infrastructure for creating and deploying applications. To understand it better, it’s necessary to understand some concepts.

### **EVM - Ethereum Virtual Machine**

The Ethereum Virtual Machine is one of the main components for Ethereum to work: it’s a virtual computer that transforms your ideas into code and implements them in the blockchain. With the use of traditional virtual machines offered in the market, such as Oracle’s Virtual Box, the user can enjoy all the benefits of a state-of-the-art infrastructure without necessarily having it, just connecting to remote access. As for the EVM, it acts as a global processor or even a computer that lends its processing power to developers. Developers, in turn, use their resources to create smart contracts and decentralized applications.

Another important point and discussed in the community is about Ethereum - and consequently, EVM - being considered Complete Turing. The machine devised by the scientist would be able to replicate any instruction given to it by code, performing all the tasks given to it reliably and correctly. Even though it’s just a hypothetical creation, the concept of Complete Turing can be adapted and understood to differentiate technologies.

In analysis, Bitcoin is defined as Incomplete Turing. The limitation in the development of applications within its blockchain due to its programming language - Script - makes it impossible to perform complex tasks.

On the other hand, Ethereum is considered as Full Turing. Using the Ethereum Virtual Machine and its high-level native programming language - Solidity -, developers interested in creating applications have enough computing power and infrastructure to implement complex codes and programs on top of the Ethereum infrastructure.

With the use of these mechanisms/technologies, Ethereum became able to provide what was idealized in its *whitepaper*: on-chain computing.

### **Smart Contracts and Dapps**

As mentioned, the initial intention with Ethereum was to allow anyone to create and implement decentralized applications on their blockchain. *Dapps* - *decentralized applications* - use EVM to process code created by developers. But how are these developed? From smart contracts.

We talk about them in detail here. In simple words, they can be defined as a series of predefined commands, which don’t depend on third parties to be executed. Its execution depends only on the programming created by its developer. In addition, smart contracts are implemented on blockchains, with Ethereum being one of the most used as infrastructure for that.

***Dapps* can have the most diverse applicability.**

With the *boom* in DeFi over the past 2 years, there has been an exponential growth in the use and development of decentralized applications. The creation of *dapps* that replicate traditional financial instruments, play2earn games, NFTs collections, technology integrations from the real world using the Ethereum infrastructure, showed us the density of the possibilities of using programming to build smart contracts.

### **How Ethereum works**

At first, the Ethereum blockchain has several similarities in its functioning in relation to Bitcoin. This stores your information as a ledger, that is, a set of all operations carried out between users. In contrast, Ethereum is based on accounts, tracking the status of each one of them. Changing your status is understood as transferring value and/or information from one account to another. Thus, two types of accounts are identified on Ethereum:

- Externally Owned Account - EOA - controlled by private keys
- Contract Account - controlled by interactions with the contract, but only enabled by an Externally Owned Account

Externally Owned Accounts can be understood as user wallets and Contract Accounts from a *dapp*. Thus, with the private keys of the wallets, users are able to execute the programming of the contracts. However, without it, they remain inactive, as they depend on an external interaction to exercise their function.

When interacting with a smart contract, users need to pay a fee dictated by the Ethereum blockchain. These fees have the same objective as those existing in Bitcoin: to prevent malicious users from being able to defraud transactions or bring down the network with DDoS attacks, for example. The difference is that in Ethereum the fees may become higher depending on the complexity of the code present in the smart contract, while in Bitcoin, factors that will increase the fee will only be the valuation of the BTC and the use in scale of the network.

Ethereum’s network fees are called gas, defined in the *gwei* unit and paid in ETH.

Using fees as a protection mechanism, it’s clear that Ethereum uses the same mechanism for inserting new blocks and validating existing ones: Proof of Work. In this way, the nodes participating in the network are responsible for processing all the information included in the blocks and obtain rewards in ETH for using computational power to perform these tasks.

However, soon Ethereum will no longer use PoW.

In recent years there has been a lot of discussion about the difficulty in scaling Ethereum. Currently, simple P2P transactions using your infrastructure cost $20, while the use of complex smart contracts like those found in DeFi protocols like Tornado Cash can cost $400.

Also, there is an environmental discussion around Proof of Work. Many international organizations have insisted on the negative impact of mining on the environment, mainly because some specialized companies use fossil fuels to generate energy for their mining companies.

Although this isn’t a sufficient reason to change the consensus-building mechanism of one of the largest decentralized computing infrastructure today, it’s necessary to take into account the pressure from institutions and society for this change.

So, in order to solve the limitations imposed on PoW-based blockchains, Ethereum developers are implementing the so-called Ethereum 2.0, which will start using the Proof of Stake.

We’ll make an article explaining in detail the changes adopted in Ethereum 2.0 and the impacts on its blockchain.

But hey, what’s your opinion about Ethereum? Tell us in the comments!

###### tags: `EN-TheSmith's-Collection`