Ethereum is a blockchain network, proposed by programmer Vitalik Buterin in a 2013 paper and launched in July 2015, that runs software instead of just recording payments. Where Bitcoin’s blockchain mainly tracks who owns how much bitcoin, Ethereum’s blockchain can run entire programs, called smart contracts, that execute automatically once their conditions are met.
That difference matters because it turns a blockchain into a platform other people can build on. A developer can write an application, publish it to the Ethereum network, and know it will keep running exactly as coded, without needing a company’s servers to stay online or a company’s terms of service to stay unchanged. Thousands of applications now run this way, covering lending, trading, insurance, gaming and digital art, collectively described as decentralized finance, or DeFi.
Ethereum has its own currency, ether, often written as ETH, which pays for the computing power the network uses to run these programs. Every action on Ethereum, whether that’s sending money, trading a token or executing a smart contract, costs a small amount of ether, called a gas fee, that goes to the computers processing the transaction.
Ethereum originally secured its network the same way Bitcoin does, through mining, but switched entirely to a different method called proof of stake in September 2022, in an upgrade widely referred to as the Merge. The change replaced competitive, energy-intensive mining with a system where validators post cryptocurrency as collateral instead, a shift covered in more detail elsewhere in this guide.
Every computer on the Ethereum network runs the same piece of software, called the Ethereum Virtual Machine, which is what actually executes a smart contract’s code and produces an identical result on every node at once. That shared execution environment is why developers sometimes describe Ethereum as a world computer: no single server hosts an application, and no single company can take it offline, because the same program is running redundantly across the entire network simultaneously.
Ethereum isn’t the only smart contract platform. Solana, Cardano and others compete for the same developers. But it remains the largest by the value of assets built on top of it, and the one most other platforms get compared against.
Credit: Source link
