What is Ethereum?
Ethereum is a public blockchain-based distributed network combined with the functionality of smart contract scripting. It is powered by its own cryptocurrency, ‘Ether’.
Ethereum is the second-largest cryptocurrency in the world, where Bitcoin remains the first. Is it just a cryptocurrency?
Bitcoin was generated as a currency unit, but Ether is developed to power the Ethereum network for performing computation by compensating miners. Ethereum uses Ethereum Virtual Machine, making the decentralization application process efficient and straightforward.
Overall, Ethereum promotes the development of applications of blockchain technology by allowing engineers to create decentralized applications.
A brief History to Ethereum
Released in the year 2015, Ethereum gained huge popularity in the year 2017. Ether currency value was increased by more than 15,000 per cent.
The open-source blockchain platform founded its way with the founder Vitalik Buterin and other crypto-entrepreneurs in 2013. Vitalik Buterin founded Bitcoin lacking in terms of functionality.
The purpose of Ethereum is to allow users to use a number of applications on one platform, just like a smartphone. It allows users to build apps on the platform.
Beta Version Launched
Vitalik Buterin launched Ethereum’s beta version in 2015. Frontier is the name given to this protocol. Also, it increased the Ethereum value in 2015.
The year 2016 marked another development of protocol named Homestead. It gave rise to the decentralization process of autonomous organizations among the public.
Decentralized Autonomous Organizations Made its Mark
The Decentralized Autonomous Organizations convert the corporate functionalities in smart contracts. It allows organizations to facilitate cryptocurrencies and automate decisions. However, the purpose was to codify the decision-making process and rules of the organization.
How Does Ethereum Works?
Some features remain the same as the Bitcoin, but it includes a unique PoW consensus mechanism. Moreover, Ethereum does use some BitTorrent strategies to develop a decentralized operating system.
Generally, people refer to ethereum as cryptocurrency. The reality is, ethereum is a platform, whereas Ether is the cryptocurrency that functions within the platform. Further, the primary role of Ether is to perform EVM computation by compensating miners.
You can buy Ethereum from various sources, including Trading platforms, Brokerages, and peer-to-peer platforms. Each platform has its own rules and challenges.
Ethereum has introduced high-level, object-oriented languages to implement smart contracts. It is known as Solidity. Besides, the developers have the ability to program by using the high-level languages mentioned above, where the code is later transformed into EVM bytecodes.
Ethereum Virtual Machine
Inside each Ethereum’s node, you will find the virtual stacks as EVMs. In simple words, EVMs help streamlines decentralized application building processes. As a result, to execute contract bytecodes, the process is necessary to boost the performance of Ethereum.
Each node runs an EVM instance in the Ethereum network. By doing so, there is no intervention from a human. Also, it provides a platform for everyone to execute code in a trustless ecosystem.
GAS – What is that?
To ensure the network coding quality, Ethereum uses an internal pricing fee mechanism, Gas. The Gas usage help to measure the Ethereum network transaction. Thus, there is a specific Gas price and Gas limit in each EVM related to the execution.
The gas prevents nefarious coding by protecting the nodes. Also, it makes sure that the quality of code on the networks is always at the optimum level.
How to Set Gas Prices?
To set the gas price, it is the amount that a user can pay for fully functional execution. The miners will not entertain your request if the gas price is set too low. Apart from that, the total computational power used by Ethereum is the gas limit. If the smart contracts are intricate and longer, your gas limit will be higher.
The gas price and gas limit make up the cost of the Ethereum transaction. The fee is usually paid in Ether, while the processing and functionality fee is calculated in gas.
Ethereum Mining and Ethereum Storage
Mining is a process to create a new currency. When nodes verify transactions on the blockchains, they are rewarded with new currency such as Ether is rewarded to the Ethererum node.
Proof-of-Work or PoW is the process for mining Ether. Here, the work symbolizes that node has already verified the transaction and now received the reward as Ether. The only drawback is it is expensive and consumes a lot of electricity and computing power.
Now, Ethereum developers are using Proof-of-Stake (PoS). In this, Ether users are selected randomly to verify transactions. Instead of a new currency, the mining is rewarded with fees.
Important Information: When PoS verify transactions of the selected users, they are known as “Stakeholders” or “Stakes”.
Once mined, you need to store the Etherum as you cannot store it physically. You will need a wallet for that. Ethereum wallets are protected with codes, and if you want to access Ether, you need to enter codes.
You will find five types of wallets:
- Paper Wallets: In paper wallets, you have the access code written on the papers. The benefit is the wallet cannot be hacked.
- Web Wallets: Coinbase wallet allows you to store your keys online. However, it is not totally protected; you have to be very careful using the wallet.
- Mobile Wallets: Mobile wallets are suitable to store private and public keys on the smartphone. For example, Jaxx offers its users to store about 13 cryptocurrencies.
- Desktop Wallets: You can store the public and private keys on your computer. However, it is accessible through a password.
- Hardware Wallets: Hardware wallets are like USBs that require physical keys to access them.
Ethereum solves the issue when you have to trust strangers with your information and money. As the technology is functioning alongside the internet, every item associated with the internet runs safely and smoothly.
So, What is Ethereum? Whether you want to create a new dApp or trade Ether, you have endless possibilities to do so. Ethereum is the pillar of future transactions.