What is Ethereum (ETH)?
Ethereum is an open platform that enables developers to build and deploy decentralized applications such as smart contracts and other complex legal and financial applications. You can think of Ethereum as a programmable Bitcoin where developers can use the underlying blockchain to create markets, shared ledgers, digital organizations, and other endless possibilities that need immutable data and agreements, all without the need for a middleman. Released in 2015, Ethereum is the brainchild of the prodigious Vitalik Buterin, who saw the potential uses of Bitcoin’s underlying blockchain technology as the next steps in furthering the expansion of the blockchain community. Ethereum is now currently the cryptocurrency with the second highest coin market cap and is expected by some to surpass Bitcoin as both a valued investment and as the world’s most popular cryptocurrency.
The Ethereum Blockchain
Ethereum is based on Bitcoin's protocol and its Blockchain design but is tweaked so that applications beyond money systems can be supported.
Smart Contracts on Ethereum Blockchain
Smart contracts are applications that run on the Ethereum Virtual Machine. This is a decentralized “world computer” where the computing power is provided by all those Ethereum nodes. Any nodes providing computing power are paid for that resource in Ether tokens.
Ethereum Virtual Machine
If you’ve tried developing a smart contract on the Ethereum blockchain, or have been in the space for a while, you might have come across the term “EVM”, short for Ethereum Virtual Machine. Virtual machines are essentially creating a level of abstraction between the executing code and the executing machine. This layer is needed to improve the portability of software, as well as to make sure applications are separated from each other, and separated from their host.
Decentralized Applications (DAPPS) on Ethereum Blockchain
A decentralized application (DApp, dApp, Dapp, or dapp) is a computer application that runs on a distributed computing system. DApps have been popularized by distributed ledger technologies (DLT) such as the Ethereum Blockchain, where DApps are often referred to as smart contracts.
Ether is the solution to the issue of payment—a digital asset-bearer like a bond or other security. You can call it the cryptocurrency of the ethereum network. ... According to ethereum.org, it should be considered as fuel for the apps on the decentralized ethereum network.
Economics of Ethereum Gas
The Ethereum blockchain requires Ethereum gas to keep itself running in the same way that a car needs gasoline to keep the lights on. All transactions on the Ethereum network cost a certain amount of gas, depending on the current demand for gas and the size and speed of the contract one is trying to execute. In this sense, running transactions over the Ethereum network is like driving a car; if you do not use enough gas, the transaction will not find its way from one party to another.
How is Ethereum BlockChain different from Bitcoin
While both the Bitcoin and Ethereum networks are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways. For example, transactions on the Ethereum network may contain executable code, while data affixed to Bitcoin network transactions are generally only for keeping notes. Other differences include block time (an ether transaction is confirmed in seconds compared to minutes for bitcoin) and the algorithms that they run on (Ethereum uses ethash while Bitcoin uses SHA-256).
More importantly, though, the Bitcoin and Ethereum networks are different with respect to their overall aims. While bitcoin was created as an alternative to national currencies and thus aspires to be a medium of exchange and a store of value, Ethereum was intended as a platform to facilitate immutable, programmatic contracts, and applications via its own currency.
BTC and ETH are both digital currencies, but the primary purpose of ether is not to establish itself as an alternative monetary system, but rather to facilitate and monetize the operation of the Ethereum smart contract and decentralized application (dapp) platform.
Ethereum is another use-case for a blockchain that supports the Bitcoin network, and theoretically should not really compete with Bitcoin. However, the popularity of ether has pushed it into competition with all cryptocurrencies, especially from the perspective of traders. For most of its history since the mid-2015 launch, ether has been close behind bitcoin on rankings of the top cryptocurrencies by market cap.
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