Ethereum is considered the leading virtual currency in the world after Bitcoin. But is Ethereum really a virtual currency or something more than that? To understand what Ethereum is about you have to dig a little deeper to understand its core features and properties and how it differs from other conventional cryptocurrencies.
When Bitcoin was created everyone focused mostly on the cryptocurrency and didn’t take notice of the platform that powers Bitcoin – blockchain technology. The creators of Ethereum tapped into the power of blockchain technology to create something more powerful than Bitcoin; an open source, decentralized software application built on the blockchain with its own browser, it’s own specialized payment system and even a dedicated coding language (Solidity) – used for building smart contracts on the Ethereum blockchain.
Ethereum is even more awesome for creating an API where decentralized applications can be built on it. The Ethereum blockchain houses hundreds to thousands of decentralized applications on its platform. These DApps are built on the blockchain using specialized coding languages and paid for using the native token of the Ethereum network called the Ether.
Ethereum is probably one of the most exiting blockchain network – the workings and processes is quite fascinating. In this article we will open your eyes to what Ethereum is really about, who created Ethereum, how Ethereum works, and finally the features of the Ethereum blockchain network.
What is Ethereum?
Ethereum is a decentralized blockchain platform where applications are built, other cryptocurrencies are developed and all these is paid for using the official token of the platform, Ether.
Ethereum is decentralized, this means it’s not controlled by a single entity but control is distributed to thousands of nodes located in different parts of the planet. These nodes are volunteers who decided to be gatekeepers of the Ethereum blockchain – downloading full copies of the Ethereum blockchain and running it in their computers.
They help validate transactions on the Ethereum blockchain network. The decentralized nature of Ethereum makes it a better option to house an application or a database. The traditional centralized system or approach simply means a single body is in charge.
This makes it easier for the platform to get attacked as the attack is directed towards a single entity. When the system fails it is a complete shutdown as just one server controls the system, for a blockchain network like Ethereum that’s built with decentralization as it’s focus, control is left at the hands of the nodes who are in charge of validating transactions on the blockchain.
So in a nutshell Ethereum is a distributed, open source software and blockchain platform that allows developers to build DApps on it and it also has its native cryptocurrency (Ether) that facilitates transaction on the blockchain.
Which genius created Ethereum?
The original idea to create Ethereum was developed by Vitalik Buterin. After witnessing the success of Bitcoin and seeing how powerful blockchain technology can be, he wrote his idea on a whitepaper and sent copies to some of his tech friends.
The whitepaper was so detailed that no one even tried ti critique everything he stated on it. Some of his trusted friends came on board and in 2014 the Ethereum project was announced. Vitalik Buterin is regarded as one of the men who pioneered the mainstream of cryptocurrency and blockchain technology.
How does Ethereum work?
The Ethereum network is one of the most fascinating in the blockchain industry. Anyone can participate as a miner to generate new Ethereum, Ethereum takes seconds to mine as opposed to Bitcoin which takes 10 minutes or more.
To participate as a miner you just have to download the full copy of the Ethereum blockchain on your computer, and get rewarded with Ether anytime you validate a transaction or mine a new coin.
The consensus algorithm used for the Ethereum blockchain is the proof of work algorithm. This means miners view pending transactions on the blockchain, they arrange those transactions in a group called blocks, and they expend computational power and also electricity to produce a piece of code called Hash which is unique and proves a miner has done the work required of him.
If the other nodes on the Ethereum validates this transaction the miner is paid 5 Ether for his troubles – which runs into thousands of dollars in current market price.
For programmers who build DApps on the Ethereum blockchain, the platform is open source and you can virtually build games and Apps on the Ethereum network. For fintech apps you have to understand how to code in smart contracts language (Solidity) to build apps with smart contract features.
Ether is also used to pay for services on the Ethereum blockchain and the amount of Ether paid depends on the amount of gas (computational needs) required to verify your transaction. Sending tokens from one user to another on the Ethereum blockchain is also very easy – as easy as sending Bitcoin – you just have to know their wallet address and send the tokens agreed, they’ll receive it in minutes.
Features of Ethereum
- Decentralized: Ethereum’s greatest appeal is the fact that it’s completely decentralized. This means no single entity is in control of the network, just a node of computers located in several spots in the world. Decentralization creates a system that’s less prone to attack and fraud, and a system that runs without interference even when one of the servers shuts down.
- Open-sourced: The Ethereum blockchain platform is completely open-sourced, this means anyone with programming knowledge has access to the source code and can build their own decentralized applications on the Ethereum blockchain.
- Native token: Ethereum isn’t really a cryptocurrency in the real sense of it – it is something bigger. But it still has its own native token: Ether – that facilitates transactions on the blockchain.
- Secure: Ethereum blockchain is one of the most secure block platforms, that’s why most ICO projects are hosted on the website.
The Ethereum blockchain really impacted on the blockchain industry and has helped create a platform where other cryptocurrencies can stand on to shine. Ethereum is more than a cryptocurrency, it is a movement started by Vitalik Buterin but will be taken further by everyone who loves blockchain technology.