Ethereum is a computing platform that works on a blockchain network. It is devoid of a centralized authority. It lets developers create and launch decentralized applications. In the decentralized application, the participants of the application become the decision-makers. Ether is one of the thousands of cryptocurrencies in use today. 

Ethereum debuted in 2015 with “Ether” (ETH) as its unit. The Ethereum platform manages and tracks the currency. The decentralized nature of the platform attracts users in droves. With no central authority controlling transactions, users enjoy anonymity.

1

The Ethereum Network

The Ethereum network uses blockchain technology to function. It maintains a public ledger that records all transactions. Every entry has a user data stamp, date, and time. Any changes need approval from every user in the chain.

The Ethereum network connects to thousands of computers spread across the globe. Users in the network use decentralized high-power computer systems, i.e. ‘nodes’. Therefore, it is almost impossible to bring down this network and has higher immunity against cyber attacks. The system runs a computer called the Ethereum Virtual Machine. Every node has a copy of the EVM. This way, every node gets updated with the latest transaction in the blockchain.

When users interact, they create “transactions.” Every transaction becomes a “block” within the Ethereum blockchain. Users must verify these blocks before they’re added to the network. Once verified, it gets updated to a digital ledger that records every transaction. Like Bitcoin, Ethereum uses the proof-of-work (PoW) consensus method to verify all transactions.

Blocks have a unique ID code with 64 digits. Crypto miners search for this code using their computers. The aim is to prove its uniqueness. The power that their computer uses is “proof” of the work. This way, the miners get ETH (Ether coins) as a reward for their work.

2

Maintaining the Blockchain

Ethereum transactions are public like other popular cryptocurrencies. Miners upload completed blocks to the network. It confirms the change and adds the new block to all the nodal computers connected to the network. Confirmed blocks are unalterable. It serves as an accurate record of every transaction on the blockchain network.

Now, are you wondering where do the Ether coins originate? Every transaction incurs a fee, known as “gas.” The user initiating the specific transaction pays the gas price. The miner gets their fee once they approve the transaction. This process incentivizes future mining activities. It also helps to ensure optimal network security. Gas also acts as a limit, and it restricts the number of actions that a user can perform per transaction. Finally, gas also prevents network spam.

3

Mining Ethereum

Ether is a utility token, thus its supply is infinite. Ether keeps circulating as miner rewards. It will continue with the staking rewards once the Ethereum network shifts to a proof-of-stake method. As a result, cryptocurrency experts believe that Ether will always be in demand. In effect, inflation would never devalue the asset too much. 

Ether allows interaction on the Ethereum platform. A virtual wallet stores the Ether crypto coins. This wallet connects to DApps. It is also a passport to use the Ethereum network. You can use Ether to buy items, lend money, play games, etc., on the Ethereum platform. 

4

Ethereum's Value

Speculation helps to determine ETH’s value as an asset. Investors could buy Ether coins in hopes of a better future performance. The Ether price also depends on the status of a portion of the cryptocurrency industry. According to experts, buying ETH offers a fractional investment opportunity.

The current Ethereum coin has a value of US$ 2,590 as of March 11th, 2022.

FAQ

What is an Ethereum smart contract?

A smart contract contains application codes. The codes are in storage at a unique location on the blockchain, called the “contract address”. Apps can connect with these smart contract functions. With this, users can change the contract’s state and start the transactions. The intelligent contracts use Vyper or Solidity codes. The codes are then converted by the EVM into byte-code and run on the blockchain.

How many types of accounts does Ethereum support?

Ethereum allows two different types of accounts, Externally Owned Account (EOA) and Contract Account (CA). The former requires a private key, while the latter comes with an associated code and executes the transaction once it receives a transaction from the EOA. Contract accounts cannot start transactions on their own, and every transaction on Ethereum has to originate from an EOA.

What an Ethereum transaction looks like? 

An Ethereum transaction uses a signed data message sent from one Ethereum account to another and the amount of ETH that needs transferring.  

What does a data message contain?

A data message contains the information of the sender and the recipient. It also has the smart contract byte-code and transaction fees from the sender.

What is a “gas price”?

A “gas price” is a fee that is essential to get the transaction included in the blockchain.

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