Ethereum is a decentralized platform and blockchain that enables developers to build and deploy smart contracts and decentralized applications (DApps). It was proposed in late 2013 by Vitalik Buterin and went live in 2015. Ethereum’s native cryptocurrency is called “Ether” (ETH).
Key features of Ethereum include:
- Smart Contracts: Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They automatically execute when certain conditions are met, eliminating the need for intermediaries.
- Decentralized Applications (DApps): Ethereum allows developers to create decentralized applications that can run on its blockchain. These applications can have a wide range of use cases, from decentralized finance (DeFi) to supply chain management, gaming, and more.
- Ethereum Virtual Machine (EVM): The EVM is a runtime environment that executes smart contracts. It ensures that code runs consistently and securely across all nodes on the Ethereum network.
- Gas Fees: Ethereum transactions and smart contract executions require a fee called “gas.” Gas fees are paid in Ether and help incentivize miners to include transactions in the blockchain.
- Decentralization: Similar to Bitcoin, Ethereum operates on a decentralized network of computers (nodes) that validate transactions and maintain the blockchain. This makes it resistant to censorship and single points of failure.
- Upgrades: Ethereum has undergone several upgrades to improve scalability, security, and functionality. The transition from Ethereum’s original proof-of-work consensus mechanism to Ethereum 2.0’s proof-of-stake aims to increase efficiency and reduce energy consumption.
- Tokenization: Ethereum’s platform has enabled the creation of a vast array of tokens beyond its native Ether. These tokens can represent assets, ownership, or even access to specific functionalities within DApps.
- Decentralized Finance (DeFi): Ethereum has played a pivotal role in the rise of decentralized finance, a movement aimed at recreating traditional financial services using blockchain technology. DeFi applications include lending, borrowing, trading, and yield farming.
Ethereum’s flexibility and ability to support complex smart contracts have contributed to its popularity and adoption. However, like all cryptocurrencies, it’s important to conduct thorough research and understand the risks before getting involved.