Definition #
Ethereum is a groundbreaking blockchain platform introduced in 2015 by Vitalik Buterin. It’s designed to enable the creation of decentralized applications (DApps) and smart contracts, expanding the capabilities of blockchain beyond simple digital currency.
History: Ethereum’s development began in late 2013 when Vitalik Buterin proposed the idea. A crowdfunding campaign in 2014 raised funds to support its development, and the network officially launched on July 30, 2015, with the release of its first version, “Frontier.”
How It Works: #
- Smart Contracts: Ethereum’s most significant innovation is the introduction of smart contracts. These are self-executing contracts with code-based terms that automatically execute actions when predefined conditions are met.
- Ether (ETH): Ethereum has its native cryptocurrency called Ether (ETH), which is used to pay for transactions and computational services on the network.
- Gas: Ethereum uses a unit called “gas” to measure computational work and transaction fees. Users pay gas fees to execute smart contracts and make transactions.
- Decentralized Applications (DApps): Developers can build decentralized applications on Ethereum, leveraging its smart contract functionality. DApps operate autonomously without a central authority.
- Ethereum Virtual Machine (EVM): The Ethereum network runs on the Ethereum Virtual Machine, a decentralized computer that executes smart contracts and ensures code integrity.
Key Features: #
- Smart Contracts: Ethereum’s smart contracts enable a wide range of applications, including DeFi, NFTs, gaming, and more.
- Decentralization: Like Bitcoin, Ethereum operates on a decentralized network of nodes.
- Open Source: Ethereum’s code is open source, allowing developers to contribute and innovate.
- Ethereum 2.0: Ethereum has transitioned to Ethereum 2.0, a major upgrade aimed at improving scalability and energy efficiency. By doing this, they have changed their consesus protocol from Proof of Work (PoW) to Proof of Stake (PoS).
- Token Standards: Ethereum introduced token standards like ERC-20 (for fungible tokens) and ERC-721 (for NFTs), which have become industry standards.
Impact: #
Ethereum has sparked a wave of innovation in the blockchain space. It has enabled the creation of decentralized finance (DeFi) platforms, non-fungible tokens (NFTs), and countless other applications. Ethereum’s impact extends beyond cryptocurrencies, as it plays a pivotal role in the growth of the decentralized internet and the broader adoption of blockchain technology.