https://www.techtarget.com/whatis/definition/Ethereum
Ethereum is an open source, distributed software platform based on blockchain technology. It has its own native cryptocurrency called Ether and a programming language called Solidity. Blockchain is a distributed ledger technology that keeps a permanent, tamper-proof list of records. Ethereum is Bitcoin's main competitor.
Ethereum enables developers to build decentralized applications. Miners produce Ether tokens that can be used as a currency and to pay for usage fees on the Ethereum network. The platform also supports smart contracts, which are a type of digital contract.
Cryptocurrency researcher Vitalik Buterin first described Ethereum in a proposal in 2013 that suggested the addition of a scripting language for programming to Bitcoin. Ethereum's development was funded by an online crowdsale, which is Crowdfunding done through issuing cryptocurrency tokens, and the project came online on July 30, 2015.
Ethereum uses a blockchain network. The network is made up of nodes -- computers of volunteers who mine for the coin. The nodes produce the Ether tokens, and mining creates the cryptography upon which the currency is based. Because mining is a demanding use of a computer's resources, miners are rewarded with Ether.
The Ethereum platform offers the computationally complete Ethereum Virtual Machine (EVM). EVM executes scripts worldwide across its network of distributed public nodes. These nodes provide the processing power for decentralized applications developers create to run on the network. Developers may buy Ether to pay for the use of the network, or they can mine for the tokens themselves, becoming a part of the network. An internal mechanism called Gas sets the pricing of transactions on the network.
Smart contracts are carried across the network in the same blockchain that records the ledger of transactions for the Ether cryptocurrency. These digital contracts can have conditions that run on scripts until fulfilled. Ethereum has built-in mechanisms to detect when an agreement is not met. Smart contracts can be used to exchange things such as properties, money and stocks on the back of an Ether token.
From the time of Ethereum's creation in July 2015 until Sept. 15, 2022, Ethereum used the Proof of Work (PoW) model to execute and verify transactions with the cryptocurrency, using the Ethereum Mainnet blockchain. Proof of Work is a type of consensus algorithm that is used for verification and data integrity.
On Sept. 15, 2022, the Ethereum community completed what is known as "The Merge" with a transition to a Proof of Stake (PoS) consensus algorithm running on the Beacon Chain. For Ethereum and its users the benefit of moving to Proof of Stake (PoS), include potentially faster transaction speeds, while using less overall energy to process and validate transactions.
Ethereum is a blockchain-based network. It is a platform that developers can use to build applications and program the smart contracts on which virtual currency is based. Like blockchain, it can be used for many different types of applications, including a number of financial uses.
Ether (ETH) is Ethereum's native cryptocurrency. It is bought and sold using the Ethereum platform. It is one of many cryptocurrencies that can be traded using the Ethereum network. It is also used to reward miners when they add blocks to a blockchain.
Ether supports the Ethereum network; it pays for computational services and applications built on the platform. It is described as the fuel that Ethereum runs on.
For example, an application running on Ethereum requires resources to function. Developers use Ether tokens to fund an application and support it on the network.
According to the Ethereum Foundation, Ethereum can be applied to codifying, decentralizing, securing and trading almost everything. Its uses include the following:
Ethereum can be used for the following purposes:
Ethereum-based projects include the following two examples:
Bitcoin is the most used cryptocurrency, and Ethereum is second to Bitcoin. The word Bitcoin is used to refer to the blockchain network and to the currency itself. Ethereum refers to the network, and Ether refers to the corresponding cryptocurrency.
Some other differences between the Bitcoin and Ethereum networks are the following:
Many benefits of blockchain technology apply to Ethereum, including the following:
Two criticisms of the Ethereum platform are the following:
The concerns around resource utilization and security were largely addressed when Ethereum moved from a PoW consensus algorithm to a PoS consensus mechanism on Sept. 15, 2022. PoS is expected to improve the blockchain energy efficiency of Ethereum by giving more mining or block validation power to miners with more coins. The result is fewer nodes doing more of the work. It also does not require special equipment -- just the amount of coins necessary to mine and an internet connection.
A downside of this approach is that more mining power is concentrated among a smaller group of people. This enables more manipulation and collaboration on the network.
Other downsides to Ethereum include the following:
Ethereum 2.0 -- also known as ETH 2.0 or Serenity -- is a major upgrade to the Ethereum network that occurred in 2022. The goal is to increase transaction throughput for the network, from 15 transactions per second to tens of thousands of transactions per second. It will do this by splitting up workloads among many parallel blockchains that share a common consensus PoS blockchain. Maliciously tampering with any single chain would require tampering with the common consensus, an action too costly to be worth it for any threat actor.
The move to ETH 2.0 is underway. It's three phases are as follows:
PoS enables miners to mine based on which miners are willing to stake a certain number of ETH coins. As of Nov. 30, 2021, that number was 32 ETH.
Ethereum Classic is the name of the original Ethereum blockchain.
In 2016, a set of smart contracts on a platform known as The DAO, a decentralized autonomous organization, raised a record $150 million in an online crowdsale, the name of the crowdfunding method used to help support Ethereum.
Shortly after that money was raised, an anonymous hacker stole $50 million DAO tokens. This resulted in the crypto community's decision to fork the network and to reappropriate the stolen funds. Forking is when the source code of an old open source program is used to create a new one.
The network fork split the Ethereum blockchain into two: the original Ethereum Classic and Ethereum, the new one. This created competition between the two networks and became known as a hard fork. A hard fork is when nodes on the newest version of a blockchain no longer accept older versions.
Key dates in the development of Ethereum include the following:
The inventions of Bitcoin and Ethereum make up a large piece of the blockchain's history. Learn more about blockchain and how it's being used for business in this enterprise guide.
24 Jan 2022