What Is Ethereum?
Everyone knows Bitcoin as the legacy and most original cryptocurrency which launched an entire industry of innovation that was predicted on blockchain technology as well as the accompanying field of technical as well as economic mechanics. However, aside from Bitcoin, there are many other alternative cryptocurrencies (known as altcoins) worth mentioning.
Perhaps the most popular altcoin out there is Ethereum ETH. This cryptocurrency was primarily envisioned as a store of value and a medium of value exchange outside of the jurisdiction of governments or third parties. In this manner, Bitcoin’s application focuses on providing individual economic freedom through creating a novel financial technology.
The application of blockchain technology, cryptography, distributed computing as well as economics in a system such as Bitcoin’s is what Ethereum ETH opened the door to – and how it started utilizing blockchain technology for many applications.
Who Created Ethereum And Why?
Ethereum is basically an open-source and public blockchain. It also is a decentralized computing platform which features turing-complete smart contract functionality. It was proposed in late 2013 by a 19 year old named Vitalik Buterin and was envisioned to be a platform that could hypothetically leverage the blockchain and store and execute computer programs across an international network of distributed nodes.
This is how Ethereum became the most well-known and established cryptocurrency besides Bitcoin and one of the most popular blockchain technology systems. Ether (ETH) is still the biggest altcoin by market cap.
The History Of Ethereum ETH
There is a long and controversial history behind Ethereum. Originally, the technology presented by Vitalik Buterin in 2013 came with a white paper which set the beginning for the Ethereum era.
In the white paper, Ethereum was outlined as a distributed world computer that is in charge of executing and storing computer programs. The goal here was to create a distributed computing platform which will take advantage of the potential afforded by blockchain technology.
The white paper’s introduction, written by Vitalik Buterin, describes Ethereum as the following:
“What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create “contracts” that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code.”
The systems which are described above refer to common applications known as decentralized apps (dApps) built on top of the Ethereum blockchain today. These include on-chain digital assets (ERC-20) tokens as well as non-fungible assets, decentralized exchanges, on-chain identity and reputation systems, decentralized autonomous organizations (DAOs), peer-to-peer gambling and most importantly, smart contracts.
What Are Smart Contracts In Ethereum?
As the primary feature of Ethereum, smart contracts are basically programs which are self-executing. They initiate the exchange of anything of value in the Ethereum network and are stored on the blockchain.
Moreover, these smart contracts are executed whenever specific conditions are met – and are outside the influence of third parties or censorship. They have no downtime, as long as the Ethereum network is functional.
The ambition of the Ethereum project goes beyond many cryptocurrencies. The platform’s main innovation became known as the “Ethereum Virtual Machine” (EVM) and is basically a turing-complete software running on the Ethereum network. It enables anyone to run any program, regardless of the programming language – directly on the Ethereum blockchain.
How Does Ethereum ETH Work?
Simply put, Ethereum works through what is known as the Ethereum Virtual Machine (EVM) which is a turing-complete software running on the Ethereum network. This ‘machine’ executes scripts across a distributed network of computers and enables the execution and storage of anything – from smart contracts to DAOs.
With its function, Ethereum allows developers to build decentralized applications on top of it – which include games, distributed registries, organizations and a lot more. So, the best way to sum up the design behind Ethereum (as the white paper notes) is as one following the main principles of:
- Simplicity – The protocol is apparently as efficient as possible – even considering the cost of data storage or time inefficiencies.
- Universality – Internal turing-complete scripting is provided language that a developer can use to program any smart contract or transaction type.
- Modularity – The Ethereum protocol is designed to be modular and separable.
- Agility – The protocol of Ethereum is not set in stone and opportunities to improve it will continuously be initiated.
- Non-Discrimination/Non-Censorship – The protocol shouldn’t attempt to resitrct or prevent specific categories of usage.
The Benefits Of Ethereum
Now that you know the principles of Ethereum, let’s talk about the benefits. The list of benefits includes the following:
- Immutability – Third parties cannot make any changes to data.
- Corruption/Tamper Proof – The censorship is unfeasible with the PoW consensus of the vast and decentralized network agreed on its global state.
- Security – The combination of the PoW consensus, cryptographic techniques and lack of a central point of failure protects the network against hacking and manipulation.
- No Downtime – Every application, smart contract and everything on the platform and Ethereum blockchain is running 24/7 and cannot be turned off.
When it comes to the disadvantages, Ethereum has some vulnerabilities. Smart contract security has become a major concern lately, as well as the high gas costs for Ethereum which make it inconvenient for mainstream users to use (as they are used to).
How To Mine Ethereum ETH
Mining Ethereum is relatively similar to Bitcoin mining. The primary difference is that the Ethereum blockchain not only stores the transaction list of the blockchain but also the most recent state of the network.
Ethereum also employs the use of Patricia Trees rather than Merkle Trees as part of the blockchain state regulation. Other features include the 12 second block time, the extra reward for including Uncles as blocks, gas compensations in block, static block reward of 3 ETH etc.
All in all, Ethereum is one of the most important cryptocurrencies and certainly one of the most used platforms in the blockchain and cryptocurrency industry. It has evolved a lot over the years and as technology talent migrates into this space, the Ethereum adoption is expected to become more mainstream.
For more information and the latest updates in the Ethereum ETH ecosystem, be sure to check out our Ethereum news!