What Is Ethereum? | ETH Review
Nov 12, 20214 min read
Ethereum is a worldwide, decentralized network that enables users to make transactions, create decentralized apps (so-called dApps) both — for business and personal usage. It has its own native cryptocurrency called Ethereum (ETH), and it is supposed to be one of the most recognizable cryptos in the world. The whole thing was eхplored by a young Canadian-Russian programmer Vitalik Buterin in 2013, and it has developed a lot since that time.
Ethereum (ETH) is the second-largest crypto according to the market, and the first place belongs to a famous Bitcoin (BTC).
The network started to work as Proof-of-Work (PoW) system, but in 2017 they shifted to Proof-of-Stake (PoS) and launched a new version called Etherium 2.0.
How Does Ethereum (ETH) Work?
It is evident that Ethereum differs from Bitcoin and other assets, but how? Maybe you’ve already heard something about the second most popular cryptocurrency in the world and the smart contracts system, but let’s dive a bit deeper.
Ethereum is not just another blockchain network, it went further to become a unique and promising platform that stands for itself. It allows you to buy and trade ETH and build new apps called DApps or decentralized applications, some of the examples are Golem, Augur, and EtherTweet, they cost millions of dollars now and are known worldwide. They are open sources without a centralized authority that are transparent but still secure. Bitcoin could be another excellent example of a DApp, that inspired thousands of others to be born and function successfully. Ethereum allowed creating some coins you’ve 100 % heard about, such as Tether (USDT) and USD Coin (USDC).
Another buzzword and concept that came to life thanks to the Ethereum network is an NFT, a non-fungible token, a digital asset that can represent a drawing, a piece of music, a photo, etc., and claims to be one of a kind and highly unique.
All the transactions are available for the public by default, as each transaction is kept and shared with the whole network, and it’s about blockchain’s nature, but don’t be scared of this transparency — it considers only transaction details, not a user’s identifying information.
All transactions come with a fee paid to the miner who validated the transaction; that is a way to thank a miner who shared his PC’s power and solved a difficult computational math problem to process the transaction.
Ethereum owns its native coin called ether (ETH) and could be used to trade as other digital currencies or to run Ethereum-based applications.
Smart Contracts Feature
It’s quite an interesting point, so that will be helpful to have a look at smart contracts closer. They act as a third party, and it’s a special algorithm that works when specific conditions and terms are met. They help people to escape a middleman that makes the execution process cheaper, as well as safer. Those contracts are stored in a global network, so it’s impossible to hack them; fraud or personal data breaches are almost impossible.
Smart contracts could be used in financial services like trading, investing, buying, etc., healthcare issues like healthcare data management, real estate deals, government processes like voting, and a lot more.
The Difference Between Ethereum (ETH) and Bitcoin (BTC)
As they are two mighty cryptocurrencies, that’s quite a reasonable question to ask. The key is that they have different purposes, they are initially different. Bitcoin was the first and not the perfect one, so it was a kind of role model for others to create a new cryptocurrency that would be better in all possible ways. Ethereum was an alternative to Bitcoin in terms of having new features and improvements, that’s why it provides:
- faster transactions;
- the largest ecosystem in blockchain and cryptocurrency;
- a smart contract system;
- an opportunity to build DApps;
- flexibility and openness;
- a massive and loyal community;
- widely accepted as fiat money replacement;
- supports a vast number of tokens.
It’s undoubtedly one of the best networks and cryptocurrencies out there, but it also has its cons we can’t skip over. The main ones are:
- increasing gas fees;
- scalability problems;
- could be a challenge for newcomers.
Some even say, “Bitcoins is gold and Ethereum is oil”, because the first one you use to store and invest, and the second one gives you the possibility to use it for different needs.
Ethereum is a blockchain idea inspired by Bitcoin and its pros and cons to transforming our ideas about cryptocurrency and blockchain. It’s an innovative product full of ambitious projects and possibilities not only for traders and investors but also for those who just want to build new apps or have their business entirely online using a trustful blockchain.
The network enables you to trade, invest, store, create, have your own business using the platform, be diverse and creative once using a blockchain.
The idea has many devoted supporters and fans worldwide, it’s growing and becoming a part of a bigger scheme, showing us the abilities laying in decentralized platforms, and time will definitely show us if it works for people or not.