What is Ethereum?
Ethereum is currently the second-largest cryptocurrency in the world. Ethereum is a decentralized platform with its own blockchain and ecosystem, where everyone can create different distributed applications (Dapp), smart contracts, and even their own cryptocurrencies. They all strive to be safe to use and secure, and there is no need for intermediaries such as banks or agencies. Everything is accessible and readable for everyone, so it's easy to avoid fraud. Ethereum is by far the largest and most well-known project in the platform category, and smart contracts are one of the most revolutionary things about the Ethereum platform. Smart contracts can be used on anything, which requires some automatic actions based on certain events.
Ethereum is currently one of the oldest cryptocurrencies on the market. Ethereal was founded by a programmer named Vitalik Buterin. Ethereum's white paper was published in 2013. Ethereum was born in an ICO in 2017.
In 2016, Ethereum faced the biggest failure in its history. Hackers found a vulnerability in the Ethereum blockchain, and a project called The DAO collapsed because of hackers. The aftermath of this hack sparked a massive debate. This crisis got to the point where the original Ethereum blockchain was branched off into two different blockchains. So-called Ethereum Classic, which continued the original branch of the Ethereum blockchain, while the current Ethereum is the new original blockchain created through a hardfork.
2017-2018 has been a great year for this currency. Most of the new coins released during this time were created on the Ethereum blockchain. Because of this, Ethereum's contribution to the explosive growth of the market was significant. During these years, the element also became known around the world, and several large companies began to consider how they could use Ethereum in their own businesses.
2018-2022 were phases that developed the current market and brought many economic sectors to the market, such as Play2Earn, dApps, NFTs, and DeFi.
How does Ethereum work?
Essentially, Ethereum is a complete ecosystem, including decentralized applications, smart contracts, and a springboard for creating new types of tokens on the ERC standard. Among the main advantages of ethereum, we find that no third party is required to process payments and that it works as fuel for decentralized applications running on the network. The only aspect to consider is that users will have to pay a transaction fee if they want to make changes to the Ethereum application. Essentially, Ethereum operates as Bitcoin and has a common structure, but with few differences such as consensus protocol and a more broad ecosystem. The similarities between the two blockchains are represented in the history of transactions, as each is responsible for storing them. Ethereum, in turn, requires each node in the network to upload the current state, all code, and storage location of each smart contract found in it, as well as each user's balance.
Smart contracts are those types of code that are responsible for defining all consensus rules. Its function is to automatically enforce the specified contract as soon as the two parties involved agree, and to perform other actions when one of the parties is not fully trustworthy.
In turn, the contract is pre-programmed with conditions that both parties involved must abide by. Thus, if one party fails to abide by the agreement, the contract will be executed just as it was programmed, without the possibility of interference from an outside entity, censorship, omission, or fraud.
Smart contracts offer greater security, lower transaction costs associated with contracting, and greater trust between the two parties compared to traditional contract law. It is even believed that such contracts will eventually replace traditional contracts in the not-too-distant future.
The latest wave of growth in the value of Ethereum has been driven by the demand for non-fungible tokens, a kind of digital certificate of authenticity. These tokens, also known by the acronym NFT, became popular and provoked the growth of a separate segment of the Ethereum ecosystem. Another factor that increased the market value of Ethereum was the decentralized finance ecosystem (DeFi), which integrates a number of financial services for virtual asset owners. These characteristics of Ethereum make some investors feel more attracted to this cryptocurrency rather than others. In order not to miss new trends, get your blockchain Ethereum wallet now.