Ethereum (ETH)

What is Ethereum?

Ethereum calls itself a decentralized computing network built on blockchain technology. You can consider it as a laptop or PC, but it does not run on only one device. Instead, it runs simultaneously on thousands of devices around the world, meaning it has no owner and operates in a completely decentralized and distributed manner.

 Ethereum, like Bitcoin and other cryptocurrencies, allows you to transfer digital money. However, this blockchain has much more functionalities. Developers can deploy their code in Ethereum and people can interact with apps created by other users. Since this blockchain is so flexible, a variety of complex applications can be launched in Ethereum.

 Simply saying, the main idea behind Ethereum is that developers can create and run code that runs on a distributed network instead of on a centralized server. Theoretically, these applications could not be shut down or censored.

 In fact, the ability to execute smart contracts and the possibility of launching centralized applications is the most important feature of Ethereum as the second best cryptocurrency on the market, which distinguishes it from Bitcoin, the king of cryptocurrencies.

Why Ethereum has value?

In the previous section, we mentioned the idea that Ethereum could run code on a distributed system. Therefore, the applications cannot be manipulated by third parties or intermediaries, but added to the Ethereum database (i.e. blockchain) and can be programmed so that the code is not editable. In addition, the database is visible to everyone, so users can check the code before interacting with it. 

 This means that anyone, anywhere, can launch applications that cannot be taken offline. Interestingly, since the blockchain's core currency, the ether (ETH), stores value, these applications can set conditions for how value is transferred.

 It is clear that the idea of "programmable money" has fascinated users, developers, and businesses around the world.

 Smart contracts executed on Ethereum are generated by transactions (whether user-generated transactions or other contracts). When a user sends a transaction to a contract, each node in the network executes the contract code and records the output. This is done using the Ethereum Virtual Machine (EVM), which converts smart contracts into instructions that a computer can read.

 A special mechanism called mining (currently) is used to update the status of the entire blockchain. Mining is done very similarly to bitcoin with a proof-of-work algorithm .

 Ethereum, however, plans to migrate to the proof-of-stock algorithm, in which the staking process will replace mining.

Who created Ethereum?

Bitcoin white paper was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. This white paper has permanently changed the landscape of digital money. A few years later, a young programmer named Vitalik Buterin came up with a way to advance the idea and apply it to any kind of application. This concept eventually became Ethereum.

 Ethereum was suggested by Butrin in 2013 in a blog post titled Ethereum: The Ultimate Smart Contract and Decentralized Application Platform. In his post, he explained the idea for a Turing complete blockchain - a decentralized computer that could run any application with enough time and resources. 

ERC-20 tokens on Ethereum blockchain

The original and native token of the Ethereum blockchain is known as Ether and the symbol ETH. A big part of Ethereum's appeal is providing the ability to create assets in the chain that can be stored and transferred like Ether. The rules governing the Ethereum token standard are set out in smart contracts, allowing developers to set specific parameters for their tokens. These can include the number of tokens, how they are issued, their divisibility, the interchangeability of each, and many more. The most prominent technical standard that allows tokens to be created in Ethereum is called the ERC-20 - that is why tokens are known as ERC-20 tokens.

What is Ethereum used for?

People can use Ethereum's native currency, ETH, as a cryptocurrency for transfers and payments. Many also see it as a bitcoin-like value store and invest in Ethereum to profit from price changes. However, unlike Bitcoin, the Ethereum blockchain is more programmable, so there is more you can do with Ethereum. It can be used as a resource for decentralized financial applications, decentralized markets, exchanges, games and much more.