Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is solely the opinion of the author.
Some important developments were seen amid the ongoing bullishness in the last seven days.
On November 15, asset management giant BlackRock spotted Ethereum [ETH] Exchange-traded fund (ETF) applications have officially reached the US Securities and Exchange Commission (SEC) desk.
The same day, the SEC informed that it has delayed its decision to approve the rule change requested by Grayscale Investments to convert its Ethereum fund into a futures ether ETF. The SEC now has time till January 1, 2024 to take a decision. The asset manager applied for the change in September.
The anticipation surrounding the ETF has certainly led to wild price rallies on the charts. However, this has led many to question how much such developments could adversely impact the decentralized model of the crypto market’s underlying blockchain technology. This is why AMBCrypto has also paid attention to the future of Ethereum.
How it started and later split
A child of Vitalik Buterin, the Ethereum blockchain network was first explored in a whitepaper in 2014. His collaborators on the project included Gavin Wood, Charles Hoskinson, Anthony Di Iorio and Joseph Lubin.
Subsequently, the team established the Ethereum Foundation (Stiftung Ethereum), a Swiss non-profit foundation. This project was launched in 2015.
Ethereum was created with the goal of being scalable, programmable, secure, and decentralized. It natively supports smart contracts, a key component of decentralized apps. Smart contracts, combined with blockchain technology, enable a vast number of decentralized finance (DeFi) applications.
Users can also generate and exchange non-fungible tokens (NFTs), which are tokens that can be tied to specific digital assets such as photos. Additionally, several other cryptocurrencies use the ERC-20 token standard on top of the Ethereum blockchain and have used it for initial coin offerings.
Only a year after launch, the project split into Ethereum and Ethereum Classic [ETC],
What happened was that in 2016, a group of network participants gained majority control of the Ethereum blockchain in order to steal over $50 million worth of Ether that was raised for a project. The majority of the Ethereum community chose to reverse the theft by invalidating the existing Ethereum blockchain and approving a blockchain with a modified history—Ethereum.
However, a portion of the community chose to maintain the original version of the Ethereum blockchain. The unchanged version of the blockchain permanently split to become Ethereum Classic.
This event became known as the hard fork.
marge and shapela
Ethereum initially employed a proof-of-work (PoW) consensus mechanism. Validating blocks requires energy-intensive computing called mining.
Due to criticism over the environmental impact of the mechanism, the project transitioned to a proof-of-stake (PoS) consensus mechanism in September 2022. This event became known as the Merge.
At this point it is important that we understand what these two mechanisms are and how they differ.
A consensus mechanism involves the rules and protocols that govern how a blockchain network reaches an agreement on its state. The two most popular mechanisms are PoW and PoS.
PoW requires the use of computational power by miners to solve challenging mathematical puzzles and validate transactions. The first miner to solve the challenge receives new coins and transaction fees. Although it is more secure and decentralized, it still uses a significant amount of energy and resources.
Instead of requiring miners to solve problems, PoS requires validators to stake some of their coins as collateral. The network then randomly chooses a validator to create a new block based on the stake size and other parameters. Validators are compensated from transaction fees rather than new currencies.
PoS is considered more scalable and energy-efficient than PoW.
At press time, a total of 28,195,445 ETH tokens were staked, worth $55.6 billion.
ETH is the second largest cryptocurrency in the world, with a market cap of over $233 billion.
A recent report from CoinGecko placed Ethereum as the top layer-1 (L1) blockchain. Its total value locked (TVL) in October 2023 was $23.0 billion.
In 2023, it reached its annual peak TVL of $31.5 billion in April. This was immediately after the merge.
At this point, we decided it was a good time to request the leading AI bot ChatGPT for important advice on these developments.
ChatGPT has proven valuable to traders and analysts. I spoke to ChatGPT about these developments while also talking a bit about the price of ETH.
At first,…
Read More: Here’s what ChatGPT expects from Ethereum for 2024