There are a lot of misconceptions out there about Ethereum.
This is true for any technology, but especially so for emerging technologies like Ethereum. When something is new and its potential is just starting to be realized, there are always misunderstandings about what it can and cannot do. With that in mind, in this article you will learn about 5 common myths about Ethereum and why they aren’t actually true.
Ethereum is just Bitcoin
This myth comes from the fact that Ethereum’s creator, Vitalik Buterin, first came to prominence with a Bitcoin Magazine article about the design philosophy behind Bitcoin. Since then, Buterin has gone on to become a high profile figure in the Ethereum community. This has led many people to mistakenly think that Ethereum is just a new implementation of the bitcoin protocol. In fact, the two systems have very little in common.
Ethereum is a decentralized network designed to run applications, not send money. Ethereum’s coin, ether, is used for payment on the network, but there is no mining in the same sense as Bitcoin. Mining is only used to distribute new tokens as a reward for running software that maintains the network. Ethereum and Bitcoin are both cryptocurrencies, but Ethereum is so much more than just that.
Ethereum is only for Developers
This is partly true, but not in the way it is intended. Ethereum is best understood as a global computer that allows developers to build decentralized applications (dApps). These dApps are built on top of Ethereum’s decentralized network, so they are built in a decentralized way. Ethereum provides the technology and infrastructure to run dApps on a decentralized network.
However, just because the typical user on Ethereum’s network is a developer doesn’t mean that Ethereum is only for developers. Ethereum’s technology is open to everyone and anyone can build on the network. In fact, the earliest use cases for Ethereum were not for dApps at all, but for more traditional businesses. As Ethereum has developed and its network has grown, it is true that the typical user is a developer. But this doesn’t mean that Ethereum is only for developers. It just means that developers are the ones who are taking advantage of Ethereum’s unique capabilities right now.
Ethereum is too slow and expensive to use for anything real
This misconception is the result of one or both of two things. First, it is based on the fact that early versions of Ethereum’s network had issues with network congestion and slow confirmation times. Second, it is often confused with a misunderstanding of the purpose of Ethereum. Ethereum is a distributed network where all nodes need to reach consensus on what is happening in the network. This is different from centralized systems where one server oversees everything.
In the early days of Ethereum, the network didn’t have enough nodes to keep up with the demand of running applications on the blockchain. This resulted in transaction times being far slower than what you would expect from a centralized system like PayPal. The network has since grown exponentially, so this problem is a thing of the past. Ethereum’s confirmation times are still slower than centralized systems, but that is not the point. Applications built on Ethereum don’t need to be as fast as centralized systems because they run on a decentralized network. Unfortunately, Ethereum’s slow and expensive days are over.
Ethereum’s Network is Always Congested
This misconception is a result of a misunderstanding of how Ethereum’s network works. Ethereum’s network is decentralized and distributed, but it is also overburdened by people trying to use it. This is an issue that has plagued the network since day one. Ethereum’s network is always congested, but it doesn’t always result in slow confirmation times. This is because the network has gas, which is the amount of computation you need to run a transaction on the network.
The amount of gas you need to run a transaction is determined by the complexity of the code running in that transaction. If there are a lot of transactions on the network, then the amount of computation that all of those transactions require can add up. This is what causes the network to slow down. This is an inherent problem with any decentralized network. As more people use the network, it gets more congested and slower. The only way around this is to build an even bigger network. That is why the Ethereum network has been growing exponentially as more and more businesses start using it.
Ether Is Just a Token That Has Nothing To Do With Ethereum
Another misconception, but this time about what a token actually is. Ethereum’s token is called ether, but it is more than just a token. Ether is the fuel that powers the network. It provides a reward to the people running the network to keep the network running and secure.
It also acts as a security against spam transactions like the transaction spam that plagued the early days of Bitcoin. Ether is used to pay the nodes on the network to process your transactions. It can also be used to pay for other dApps built on the Ethereum network. And lastly, it is an investment. Ether is just like any other investment. Some people will use it to make money, and others will lose money on it.
Ether Is Only Used By Developers To Run DApps
This is a misconception about what ether is used for, but it is also a misconception about what a dApp is. A dApp is simply an application that runs on a decentralized network such as Ethereum.
While it is true that dApps use ether to run, that doesn’t mean that ether is used only by dApps. In fact, people who use the Ethereum network to send money also pay in ether. The amount of ether needed is determined by the complexity of the code running in the transaction. The person who pays uses ether to pay for the gas in the transaction. This may sound like a scam, but it is actually the opposite. The person who pays in ether is actually preventing a scam.
Ethereum is a complex network that is still being built and improved. It is a technology that is still in its infancy, but has already provided solutions to some of the biggest problems facing decentralized networks. Ethereum’s technology is being used by real businesses, both traditional and decentralized.
It is providing critical solutions to real-world problems. Ethereum will continue to grow and develop, and as it does more solutions will be created. That is why it is important to understand what Ethereum can and can’t do right now.
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