Table of Contents
Ethereum is a decentralized blockchain platform that enables the creation and execution of smart contracts and decentralized applications (dApps). It is the second-largest cryptocurrency by market capitalization, after Bitcoin. Understanding its core features helps in grasping its significance in the digital economy.
What is Ethereum?
Ethereum was proposed in 2013 by Vitalik Buterin and launched in 2015. Unlike Bitcoin, which primarily functions as a digital currency, Ethereum provides a platform for building programmable contracts and applications. Its native currency is called Ether (ETH).
How Does Ethereum Work?
Ethereum operates on a blockchain that records all transactions and smart contract executions. Developers write smart contracts using a programming language called Solidity. These contracts automatically execute predefined actions when certain conditions are met.
The network is maintained by a global community of miners or validators, depending on the consensus mechanism. Currently, Ethereum is transitioning from proof-of-work (PoW) to proof-of-stake (PoS) to improve scalability and reduce energy consumption.
Key Features of Ethereum
- Smart Contracts: Self-executing contracts with terms directly written into code.
- Decentralized Applications: Apps that run without a central authority.
- Ethereum Virtual Machine (EVM): A runtime environment for executing smart contracts.
- Token Creation: Ability to create new tokens using standards like ERC-20.