Ethereum: A Deep Dive. Here's why Ethereum is the opportunity of a lifetime.

What is Ethereum?

Ethereum is the largest smart contract blockchain in the world, and it's native coin ether (ETH) is the second most valuable cryptocurrency. As a smart contract chain, it essentially operates as a decentralized computer. You can run all kinds of decentralized and trustless applications on this computer like DEX's (Decentralized Exchanges) for example. It's also very popular with NFT's. Every transaction on the Ethereum blockchain takes up a resource called gas. There is a limited amount of data that can go in each block, therefore there is a limited amount of gas. The price of gas (and therefore, transactions) is dictated by the laws of supply and demand; if more people want to make transactions then the price of transactions will increase.

I've heard it's expensive as fuck! What's being done?

This is probably Ethereum's largest criticism. It's no secret that the Ethereum blockchain is very expensive to use. It's important to recall that the only reason the blockchain is so expensive is because it's in such high demand.

This problem is being mitigated in a few ways:

1. Layer 2 solutions. These are other blockchains that are built on top of Ethereum that utilize it's security and decentralization. They have fees that are much cheaper than the native blockchain. But surprisingly, they're still not that cheap. Again - really high demand. The largest issue with Layer 2 solutions comes from the fact that they aren't widely accepted yet. Most exchanges don't support them natively, which means you would need to use an expensive bridge to move your funds over if you don't already use an exchange that supports them. The other issue with them is that there are many different L2's, and different dAPPS support different chains.
2. ETH2. This upgrade is frankly legendary. It's made up of a few different pieces. The first one is Ethereum's merge to Proof of Stake. I'll discuss it in more detail later. The more important piece for scaling is Sharding. Sharding allows us to seperate the blockchain into more managable pieces. This means that each node will only need to store a piece of the blockchain instead of the entire thing. This increases both speed and decentralization, it's an absolute no brainer.

What makes Ethereum different then all the other chains?

Ethereum is extremely popular. This is one of the biggest benefits that Ethereum has over other blockchains. On DefiPulse, every single one of the top 128 DeFi projects run on Ethereum. Every Single One. It is by far the most popular and the most successful blockchain. It also consistently racks up much higher transaction volumes and network fees collected than even the big daddy Bitcoin.

What's the merge to Proof of Stake all about?

Ethereum will merge from Proof of Work to Proof of Stake. This is currently estimated to occur in Q2 2022, but that may change. This change will:

1. Reduce Ethereum's energy usage by more than 99%. Since instead of mining, block proposers have to stake ETH, Ethereum's energy usage will fall by a huge amount. This is great because crypto projects are constantly targeted for their energy usage. Ethereum will be immune to this criticism.
2. Make block proposers accountable. In the current PoW system, if a miner attacks the blockchain they cannot be punished. Under PoS, they have staked their ETH into the network, which means it can be slashed if they misbehave. This improves security, as no sane person would attack a network that they have thousands of dollars staked in.
3. Allows for sharding. Sharding isn't currently possible on Proof of Work chains. Proof of Stake allows for this important upgrade.

Okay, so Ethereum is great. But will it make me money?

Hell yes. The merge to PoS is probably the most bullish event in the entirety of crypto, in my opinion. Here is why. You may remember the EIP-1559 upgrade a few months ago that reduced the amount of ETH being issued by about 30%. Here's ETH's price leading up to this event:

60% increase in 2 weeks

You will notice a 60% increase in price in 2 weeks. Fucking wild.

This what happened when the ETH creation rate was reduced by 30%. Now brave yourself for this: the merge to PoS will reduce emissions by 90%. You can infer yourself how bullish you think this is, but I have no doubt it will be bullish as all fuck. If a 30% decrease in ETH creation is bullish enough for a 60% increase, a 90% decrease is going to be absolutely wild. The laws of supply and demand dictate that if supply decreases-as it will, because ETH will become deflationary-and demand remains constant, price MUST increase. This is a perfect storm of events for an absolute explosion in ETH's price.

TL;DR

Ethereum is the most popular smart contract blockchain by a mile. Its issues are being actively worked on by thousands of people all over the world who are very dedicated. Its merge to PoS is going to be one of the most bullish events ever. If a 30% decrease in ETH issuance causes a 60% increase in price, what do you think a 90% decrease in ETH issuance will cause? Ethereum has an amazing future, and so will you if you invest in it.