Ethereum revolutionized the blockchain ecosystem because it is a platform for decentralized application development and smart contracts, not just a currency. Unlike Bitcoin, Ethereum is open-source and programmable. Developers can use the protocol to build their own apps designed to solve real-world problems and meet market needs. While Bitcoin started the Blockchain revolution, Ethereum has opened it up to a world of new possibilities.
Ethereum continues to dominate the market for blockchain-based decentralized applications, but it is no longer the only game in town. Competing protocols like Cardano and Eos can also be used to build decentralized applications. These blockchains may eventually overtake Ethereum as the premier platforms for decentralized application development and ICOs.
The Cardano Protocol
Cardano is a smart contract platform termed the "Ethereum Killer" and the "Japanese Ethereum" due to its similarity with Ethereum and popularity in the Japanese market. Cardano aims to become an alternative to Ethereum's low transaction capacity and expensive "gas" fees on transactions.
Gas is the fee paid to miners who verify transactions on the Ethereum ledger, and many believe it is a major weakness of Ethereum's block validation system. Instead of using a Proof-of-Work algorithm, Cardano uses something called the Ouroboros Proof-of-Stake.
Ethereum’s Proof-of-Work system relies on miners to validate new blocks and prevent DDOS spam attacks from overloading the network. It requires miners to solve computationally intensive "proofs" before new blocks can be accepted to the blockchain ledger. Cardano's unique Oroboros Proof-of-Stake algorithm doesn't require mining. Instead, it uses a system of "slot leaders" who verify transactions and may be cheaper and more efficient than the traditional, mining-driven methods of block verification.
EOS is a platform for developing decentralized applications that aims to compete with Ethereum through simplicity and a user-friendly programming language that is more accessible to beginners. The platform has built-in tools to help users create applications. It also has superior scaling and a significantly larger transaction capacity compared to Ethereum.
For transaction capacity, EOS will utilize something called "Graphene technology" which may be able to handle 10,000-100,000 transactions per second. Such a large transaction capacity will make the EOS platform well suited for commercial-scale decentralized applications. The developers of EOS plan to scale up transaction capacity to over a million per second through a technique called parallelization that will enable the system to calculate and execute multiple processes at the same time.
Ethereum will face stiff competition over the next couple of years, but that doesn't mean it will fade into obsolescence. The Ethereum protocol is backed by a robust team of developers who constantly update the network to handle new challenges. The development team is fighting back through several big improvements: Sharding, Raiden, and the implementation of Proof-of-Stake.
Sharding breaks the blockchain into smaller parts that will process transactions in parallel and help boost the network's transaction capacity. Raiden is an Ethereum scalability solution that aims to increase transaction speed and reduce fees. Proof-of-stake will help reduce the inefficiency and energy requirements of mining in a Proof-of-Work system.
Ethereum is keeping up with its competition, but improving an already operational network can be compared to working on a machine while it is running. Problems can be solved, but nowhere near as quickly and efficiently as blockchain technologies built specifically with those problems in mind. That's why Cardano or EOS may become the next Ethereum.