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Learn all the features of Ethereum in the article!
If you are a newbie to the crypto world or an experienced trader, a phenomenon like Ethereum could not pass you by. On the wave of a sharp rise in bitcoin prices, more and more people are interested in cryptocurrencies. If almost everyone has heard about bitcoin, then the next most popular cryptocurrency Ethereum is not inferior. In this article, we will take a detailed look at what ethereum is and how it works.
What is it?
The Ethereum cryptocurrency is an open software platform based on blockchain technology that allows developers to build and release decentralized applications. In other words, it is much more than a cryptocurrency. Ethereum runs simultaneously on thousands of computers around the world and does not have a single owner. Furthermore, Ethereum mining employs the same PoW algorithm as bitcoin does. In other words, miners validate and confirm transactions, getting a reward with 2 ETH. Besides, such complex calculations require sufficient computer power and only 18 million coins can be mined, there is no limitation to ETH emission.
History of Ethereum
Unlike Bitcoin, there is a real person behind Ethereum or a leader. Ethereum was established by Russian-Canadian programmer and journalist Vitalik Buterin. Working on Bitcoin in 2013, he discovered that this blockchain does not have its own scripting language. At the end of 2013, Ethereum was released. The main goal of Ethereum was to provide the blockchain with an embedded, full-fledged programming language that can be used to create smart contracts. Furthermore, with the development of the crypto industry, more and more services accept ETH as a payment. For instance, you can exchange your crypto coins into your local fiat currency. On the other hand, there is a list of shops and platforms, suitable for paying with ether: PizzaForCoins, Ujo Music, Chicago Gem Shop, 1000 EcoFarms, Amagi Metals, Cryptoart , FlokiNet, Peddler.com, etc.
By the way, smart contracts are written in software code and stored on the blockchain. They make transactions “traceable, transparent and irreversible”. In other words, the main idea of Ethereum is that developers can create and run code on a distributed network instead of a centralized server. It means that theoretically, such applications cannot be stopped or be influenced in any way. Such programs are added to the ethereum database (i.e. its blockchain) and can be programmed so that the code cannot be edited. In addition, the database of the entire network is visible to everyone, so users can check the code they need before interacting with it.
The difference between ethereum and bitcoin
Bitcoin is based on blockchain technology and financial incentives to create a global payment monetary system. Several key innovations were presented by bitcoin. It allows users to coordinate each action around the world without the need for central government involvement.
While Bitcoin uses blockchain technology to track who owns bitcoin, ethereum uses blockchain as a platform to run almost any decentralized application. It’s also called software that can be used by everyone but is protected from unauthorized access.
Bitcoin is considered to be the first generation of blockchain. It was not designed to be overly sophisticated and it is its strong point from the side of security. The blockchain is deliberately not flexible due to security prioritization at the basic level. Bitcoin’s smart contract language is extremely limited in its capabilities.
On the other hand, the second generation of blockchains is much more complex. Such platforms provide a greater degree of programmability. Ethereum gives developers a lot more freedom with their code to create Decentralized Applications. Bitcoin and ethereum belong to different generations of blockchain technology. However, the popularity and growing market capitalization of ethereum compete with all cryptocurrencies.
Ethereum occurred on the wave of second-generation blockchains and today it remains the most prominent in this segment. It shares similarities with Bitcoin and can perform most of the same functions, but they are very different.
The common point between bitcoin and Ethereum is the fact that they both use distributed, publicly available networking technologies or blockchain. By analogy with Bitcoin, Ethereum also has its open-source code. Anyone can take part in the development of the protocol or create applications based on it. According to statistics, Ethereum has the largest community of blockchain developers today.