Vitalik Buterin started developing a new blockchain back in 2013. In 2015, it was released as ‘Ethereum’. The ethos surrounding Ethereum was in many ways the same of Satoshi’s visions with Bitcoin, at least in respect to decentralization and disruption. The idea of taking power from financial institutions and putting it back in the hands of the people.
Ethereum however is a very different blockchain to that of Bitcoin. Although it does have a currency, known as Ether, it was never intended to be a digital currency. Ethereum’s blockchain is a little more advanced that the original Bitcoin blockchain. It can work as much more than a public-ledger technology in respect to it’s currency, Ether.
What made Ethereum jump into the limelight in 2017 was the fact that it implemented smart contracts. Smart contracts allow users to implement code into their transactions. Ethereum smart contracts also allow the creation of decentralized applications, DApps, and of course, ERC-20 tokens.
Have ERC-20 Tokens Caused More Damage Than Good?
What happens when you give every man and his dog the ability to create their very own tradable ‘cryptocurrency’ and charge them nothing to do so? Looking back over the last twelve months we can answer that question.
Q4 of 2017 and Q1 of 2018 saw a mass influx of initial coin offerings (ICOs). Many of them legitimate projects too, some of the biggest projects in blockchain development were ICO’s of ERC-20 tokens. Many have now switched to their own blockchains, and many still remain ERC-20.
However, there were a lot of ICOs that were nothing but scams. They had great websites, they had well-written whitepapers, and great roadmaps – what more could you want? You sent them your Ether and instantly you received your new ERC-20 tokens in back in your Ethereum address. Sadly, people took advantage of this.
The influx of pointless, useless, undeveloped of simply inexistent projects that raised huge amounts of Ether during their ICO’s meant a lot of people lost a significant amount of money. Ethereum isn’t entirely to blame, people should have done more due-diligence, but it certainly made it easier for the scammers to raise huge amounts of Ether.
The Future of Ethereum
The future of Ethereum is now looking much less sure than it was this time last year. There have been other issues such as scalability too. One of the first DApps that ran on Ethereum blockchain, CryptoKitties, managed to congest the network singlehandedly. Whilst some people welcomed this, seeing it as a bug that needed to be fixed, others simply feel it proved Ethereum is not the platform blockchain of the future. Only time will tell, but Ethereum needs to move quickly if it wants to regain the respect it once had.