What Is Ethereum?
Ethereum is a global opensource platform, decentralized computer, and ecosystem for building decentralized applications or DApps coded as smart contracts on the blockchain. It is an open technology offering data-friendly services and is money-driven by a global community with limitless use cases.
You can think of Ethereum more simply as software that runs on connected computers that, together, ensure that pieces of coded instructions or smart contracts are replicated and processed seamlessly without a central entity or device. It builds on the concept of Bitcoin, which stores and duplicates transaction data but brings more depth into the idea by making it possible to store codes just like transactions across a large number of computers that can participate on the network from anywhere.
Summary of Important Points
- Ethereum is an open-source, decentralized blockchain for building limitless cases of decentralized applications.
- Ethereum takes the Bitcoin idea a bit further by making it possible to store codes or smart contracts on the blockchain, just like transactions on the Bitcoin network.
- Developers can write smart contracts on Ethereum using Turing complete programming languages like Vyper, Lisp, and Solidity.
- Anyone can become a node on Ethereum, participate in creating blocks, explore the network, and run smart contracts on the blockchain.
- There is no permission or signup requirement needed to start using Ethereum.
- Ethereum uses a proof-of-work consensus algorithm which requires nodes to solve complex puzzles to show they have done the work required to solve a block.
- Ethhash, Ethereum hash function, makes it possible to mine the cryptocurrency with any device.
- Ethereum has a native currency, ETH, used to settle transactions on the network, although ETH has smaller units such as Gwei, and Wei, the smallest unit of transactions.
Features of Ethereum
Ethereum belongs to the digital asset and cryptocurrency class of coins, and it is also an independent blockchain. Most tokens use the Ethereum virtual machine to create smart contracts or rules that form the basis of their existence. So it is common in the crypto literature to see Ethereum referred to as a blockchain which explains that there are connected blocks of transactions on Ethereum. It is a coin because it does not exist on another blockchain.
Ethereum is a public blockchain with blocks of transaction data and smart contracts created by participants who distribute these updated states to other participants to add to their ledger copy. Each block contains a reference to the fingerprint of the previous blocks, forming the blockchain. Ethereum is also permissionless, which means that anyone can start running a node or deploy a smart contract to the network without contacting someone else or signing up as required in most centralized networks.
Easy to Mine
It is also possible to modify the original Ethereum code into a different network incompatible with the mainchain. Ethereum uses a proof-of-work consensus and mining algorithm similar to Bitcoin.
Still, Ethereum’s hash function, Ethhash, makes it possible to mine the cryptocurrency with common hardware like your PC. Ethereum’s native currency is the ETH, which is used to settle network fees. However, there are other units of ETH such as:
- Wei, the lowest unit of ETH where 1 ETH is a quintillion Wei
- Finney, a thousand Wei
- Szabo, a million Wei
- Gwei, a billion Wei
- Mwei, trillion Wei
- Kwei, a quadrillion Wei
How Ethereum Reduces Data Loss Risks
Ethereum is the first blockchain that supports smart contracts, and it has become the most popular blockchain for developers for that reason. Smart contracts can be used to automate real-life transactional interactions between individuals without reliance on any central authority.
Ethereum Virtual Machine (EVM)
Ethereum’s decentralized logic layer for computing states and running smart contract logic is the EVM which works as a distributed software that brings smart contracts to life.
Participants on Ethereum can run codes or smart contracts on the EVM. The codes are written in Turing complete programming languages, Vyper, Lisp, or Solidity (the most popular). Written codes encode state changes on the Ethereum network and can be used to create a limitless number of real-life use-cases. Typical examples include a trading platform for digital assets, an NFT platform, and a multi-coin wallet for managing tokens deployed on Ethereum.
For mining or solving blocks on Ethereum, participants pay a fee that is sent to the miner to compensate them and incentivize them to continue to mine blocks. The current calculation for gas fees is gas unit (limit) * (base fee + tip). Miners receive a gas unit (limit) of 21,000 x tip.
Swarm and Whisper
Swarm works like BitTorrent. It stores chunks of data and receives rewards in ETH. Whisper enables the communication between nodes on the Ethereum network.
How Does Ethereum Fair Against Other Cryptocurrencies?
Ethereum has a block time of 14 seconds, and with current proof-of-stake upgrades underway, Ethereum will be more efficient than several other blockchains. Ethereum also enjoys the status of being the most popular platform for blockchain developers.
Popularity sets Ethereum ahead of Bitcoin—its current taproot upgrade—and other smart contract blockchains like Solana or Cardano. Ethereum’s programming languages also have a more gradual learning curve than Rust. Bitcoin transactions take around 10 minutes, which makes Ethereum better in this respect. However, fees on Ethereum became so high at some point, which is a pro for Bitcoin.
That being said, Ethereum remains more useful, and the ETH 2.0 upgrade will make it more scalable with predictably tolerable fees.
Posts and articles about Ethereum
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How much Ethereum should I stake to become a validator?
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How do I convert Bitcoin to Ethereum on a DEX?
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Which DApps are built on Ethereum blockchains?
Hi, are there any DApps that run on Ethereum blockchains? If so, which ones?
Can I buy Ethereum if I'm under 18?
Hi, I really want to start investing in crypto and buy Ethereum, but I'm only 16-years-old. Can I still do it, or would I need to sign up under my dad?
Is Ethereum different from Vitalik Buterin’s first vision of it?
There's a lot of information available on the features and pros of Ethereum today. But what I can't seem to find out is what Vitalik Buterin first envisioned fo...
How did Vitalik Buterin manage to raise millions to start Ethereum at such a young age?
I'm so interested in Vitalik Buterin and how he was able to start up Ethereum so young. I recently read that he was able to raise $18 million in funding to firs...
How did the Ethereum Yellow Paper differ from the White Paper?
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What are the equivalents to Ethereum?
Hi, are there any cryptocurrencies that are considered to be competition or at least an equivalent to Ethereum?
Are there competing blockchains emerging against Ethereum?
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What did Buterin write about in the original Ethereum White Paper?
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What will Ethereum gas fees be after moving to proof-of-stake?
Will Ethereum's move from proof-of-work to proof-of-stake reduce gas fees?
Is Ethereum still worth investing in?
Is Ethereum still considered to be a good investment with the new cryptoverse developments?
Ethereum vs. Bitcoin: Which has better security?
Which cryptocurrency would you say is the safest to invest in and most likely to survive an attack?
What can we learn from a crypto flash crash?
Hi, I saw that both Bitcoin and Ethereum had a flash crash about 4 months ago, dropping around 15% each. What is the reason for this?
How do I identify the number of unique transaction addresses using an application/protocol on Ethereum?
I am trying to analyze on Etherscan the number of unique addresses which have used a protocol (e.g., MakerDAO, Augur, 0x, Dharma, etc.,). However, all the info ...
Has Etherum become more or less lucrative?
Good evening everyone. Statistically, has Ethereum become more or less lucrative than Bitcoin?