Ethereum is an open-source, decentralized blockchain that allows developers to build decentralized applications (DApps) and smart contracts.
Table of Contents
- Ethereum, DApps and Smart contracts
- Tokens and Decentralized exchanges
- Transition from Proof-of-work to Proof-of-stake
- Conclusion
Ethereum, DApps and Smart Contracts
Vitalik Buterin, a cryptocurrency enthusiast and programmer, made the initial proposal in 2013, and it was officially launched on July 30, 2015.
Ethereum was designed to be a platform where other developers could build decentralized applications using a blockchain to store transaction records. Being a Turing-complete programming language, developers can write smart contracts that will automatically execute as soon as the defined conditions are met. This makes Ethereum different from Bitcoin, since the former is primarily an electronic cash system that provides peer-to-peer exchange.
Smart contracts are self-executing contracts that are coded to enforce the rules and regulations of a particular agreement, without the need for intermediaries like banks or lawyers.
Ethereum also has the ability to create and manage tokens, which is a key feature of the network. These tokens can be traded on decentralized exchanges (DEXs) and can represent any utility or asset. Currently there is a vast ecosystem of decentralized applications and services due to the possibility to build on top of Ethereum.
Tokens and Decentralized Exchanges
Ether (ETH), Ethereum’s own native cryptocurrency, is the token used to pay for gas costs and transaction fees on the network. The cost of gas is denominated in Ether and varies depending on network congestion and other factors.
Officially Ethereum is governed by a decentralized community of developers, miners and users. Based in Switzerland, The Ethereum Foundation is responsible for overseeing the development of the platform.
Transition from Proof-of-Work to Proof-of-Stake
Like Bitcoin, Ethereum used Proof-of-work (POW) consensus mechanism, but in 2022 Ethereum switched to Proof-of-stake (POS) mechanism in an upgrade process known as “The Merge” which greatly changes how the ecosystem operates.
Conclusion
Ethereum is an innovative blockchain platform that enables developers to build decentralized applications and smart contracts. Its ability to create and manage tokens, combined with its decentralized governance structure, has led to the creation of a vibrant and growing ecosystem of decentralized applications and services.
