Ethereum blockchain. Is it good or bad for cryptocurrency?
Ethereum blockchain just had its internal flippening. Let’s look at this more closely.
A Coin Metrics study says that thanks to a surge in transactions on its blockchain, the Ethereum network just had an internal “flippening.” What does it mean?
Recently, something has happened on Ethereum blockchain that is often referred to as flippening. According to Coin Metrics, for the first time in the history of cryptocurrency, the number of ERC-20 tokens transactions exceeded the number of transactions of ETH coins itself. And as popular as those tokens are, they could be on the verge of giving way to the newer class of non-fungible tokens. So what does all this really mean? For starters, let’s talk about the basic things of Ethereum blockchain.
How do Ethereum transactions work?
An Ethereum transaction is an operation to send a signed data initiated by a network member (account). By the operation we mean sending a certain amount of ETH, launching the code (program) recorded in the contract or creating a new contract.
Any Ethereum transaction, except those that create new contracts, has a recipient. It can be an external managed account (controlled by a private key) or an account-contract (contains a code that is activated by the transaction).
Typically, when talking about an Ethereum transaction, most crypto community members who do not have in-depth knowledge of blockchain are referring to the transfer of funds from one account to another.
Each Ethereum transaction contains a standard set of data:
- transaction hash — a unique number consisting of numbers and letters of the Latin alphabet used for identification;
- number of the block in which the data on the transaction are written down;
- address of the account that is the recipient;
- a digital signature confirming the sender’s intention to conduct the transaction;
- value — the amount of Ethereum sent (can be equal to 0);
- gas limit — the maximum amount of gas allowed to be spent on the transaction;
- gas price — user-defined price per unit of gas;
- gas Used — the amount of gas actually used to process the transaction;
- transaction fee — payment for the transaction;
- data — an optional field where you can specify the message to the recipient.
For an Ethereum transaction, the sender must pay a commission to the miners who confirm it and include it to blockchain. This payment is made in units called “gas”.
Gas is a dynamic indicator of the amount of blockchain computing performed during a transaction. Essentially, it is the internal currency of the Ethereum network that is used to execute transactions. It is also possible to draw an analogy with the fuel, which provides the movement of data packets inside the blockchain of ETH.
What is an ERC-20 token?
People quickly realized that coins require certain standards to be made. It’s like issuing a credit card. Each card has a black stripe on the back, and most modern cards also have a chip. The card number, expiration date, and security code are common card standards.
But imagine that someone will decide to create a credit card that has no information other than a QR code. Of course, such minimalism will look stylish, but it is unlikely that it will be appreciated in stores because it does not correspond to the standard rules of credit card design. ERC20 is a standard for creating tokens on Ethereum blockchain. It includes a list of rules that tokens should follow.
Flippening is here
The Coin Metrics study includes a term that was originally described in the scenario in which any another cryptocurrency took over the position of Bitcoin. So far, this has never happened in the history of the industry, but it has happened in the Ethereum blockchain itself.
Despite the boom of ICO and the appearance of a huge number of useless ERC-20 tokens, many altcoins still brought network value. In fact, by April of this year, more than 181 000 ERC-20 coins existed on the Ethereum blockchain.
They are all divided by Coin Metrics analysts into three categories: utility tokens, exchange tokens and stablecoins. The former allows users to access a certain service, for example, to reduce trading fees on Binance exchange due to the accumulation of BNB tokens. The BNB token can also be categorized as exchange tokens since the cryptocurrency was made by the exchange itself. Finally, stablecoins (from the word stable) have a fixed price, most often they are used as a universal means of payment.
In other words, flippening allows us to judge about the healthy development of the Ethereum blockchain. It’s time to stock up on cryptocurrency — visit our Ethex.bet lottery to win prizes for your luck!