Ethereum is a blockchain-based software platform that is mainly utilized to send and receive value around the world without the interference of a third party. This platform also supports Ether, the second-largest cryptocurrency globally by market capitalization.
The primary use case of Ethereum is the facilitation of value exchange mainly using its native token Ether. It’s popularity can be accredited to it’s long-term potential and the progressive vision of its developers to employ Ethereum to bestow the users with more control over their finances and digital data.
Ethereum was introduced in 2013 by programmer Vitalik Buterin. The development of the project was crowdfunded in 2014, and the network went live on 30 July 2015, with 72 million coins pre-mined.
The vision is highly ambitious which has also caused the blockchain platform to be referred to as “world computer”. However, it has received its share of criticism and lack of confidence in its ability to provide what it aims. Nonetheless, if Ethereum delivers what it promises, it would induce the generation of apps that would greatly differ from Facebook or Google. Users will knowingly or unknowingly trust these apps with their data.
Ethereum blockchain records all the smart contracts ever created on the platform. The blockchain structure of Ethereum is very similar to that of Bitcoin in the sense that both are shared records of the complete history of smart contracts and transactions made on the platform.
Ethereum’s decentralization is a result of its blockchain’s copy being stored in the computers of hundreds of volunteers from around the globe. These computers are referred to as ‘nodes’ by the Ethereum community. Each time an Ethereum smart contract is employed, the transaction is processed by the network of these thousands of computers or nodes ensuring that the user follows all the rules.
Each one of these nodes is interconnected and are required to adhere to the same set of rules for accepting transactions and running smart contracts.
It’s different from Bitcoin in the sense that Ethereum nodes not just store transaction details but also keeps track of the current status of all applications. The information includes each user’s balance, entire smart contract codes, the location of their record and any alterations made to them.
Each node maintains a record of:
Ether is required to be able to leverage smart contracts and Ethereum apps. In fact, Ether is required to do anything and everything on Ethereum. When Ethereum’s native token is utilized for the purpose of executing smart contracts on the network, it is referred to as “gas”. Smart contracts, for instance, can be used to post social media posts on social media platforms, or to initiate borrowing of coins by an account on an Ethereum-based lending platform.
Just like bank accounts, Ethereum too uses accounts to store ether. These accounts can be divided into two categories:
Calling a smart contract costs a certain amount of ether which goes up depending on the amount of computation required by the transaction. Additionally, the fees increase when Ethereum is congested.
Ethereum (ETH) is also available at LCX Exchange.
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