Ethereum isn’t just another digital currency; it’s a whole platform. One way to look at it is as a hub for decentralized smart contracts and various other tokens. It was put together by a team of eight, with Vitalik Buterin leading the charge. Ethereum’s grand plan is to become a worldwide hub for all kinds of decentralized applications, making it possible for people everywhere to run tamper-proof software.
Ethereum vs Bitcoin
Sure, Ethereum and Bitcoin share some similarities. They’re both digital currencies, traded online, and stored in various types of crypto wallets. Plus, they’re both decentralized, meaning they don’t rely on any central authority. They both use blockchain technology, a digital ledger system.
But Ethereum and Bitcoin also have their differences. For starters, Ethereum’s transactions can include code that does stuff, called smart contracts, while Bitcoin’s transaction data is mostly for record-keeping. Then there’s the speed: Ethereum transactions zip through in seconds, while Bitcoin ones take minutes.
When it comes to goals, Bitcoin and Ethereum take different paths. Bitcoin aims to be a digital replacement for national currencies, serving as a medium of exchange and a store of value. Ethereum, on the other hand, is all about smart contracts and applications that run without interference, powered by its own currency.
How Does Ethereum Get Things Done?
Smart Contracts: Imagine contracts that enforce themselves through code. That’s what smart contracts do. They’re like regular contracts but without the need for a middleman. And they’re written in a programming language called Solidity.
Decentralized Apps (dApps): Think of dApps as regular apps but decentralized. They don’t rely on a central server; instead, they run on the Ethereum network using smart contracts. Developers create smart contracts, pop them onto the network, and let the nodes handle the rest.
ERC-20 Tokens: Ethereum isn’t just about its own currency; it’s a platform for other cryptocurrencies too. These cryptocurrencies, known as ERC-20 tokens, build on top of the Ethereum protocol.
Gas Fees: Every transaction or smart contract execution on Ethereum comes with a fee, known as a gas fee. It’s what keeps the wheels turning on the Ethereum network.
ETH: Ether (ETH) is the lifeblood of the Ethereum network. It’s what keeps the nodes running, rewarding them for verifying transactions, executing smart contracts, and running dApps. ETH is the second-largest cryptocurrency in the market, right behind Bitcoin.
