This section will delve into the realm of Ethereum, answering the questions what is Ethereum and how does it function?
When you hear the term “global computer,” what comes to mind? Some may envision a sentient guardian overseeing daily processes, while others may think of a destructive machine akin to the Terminator.
However, the term “global computer” is often used to describe the renowned cryptocurrency project, Ethereum.
Here, we will shine a light on Ethereum – unraveling its essence, journey, distinctive traits, and prospects.
Let's dive in!
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What is Ethereum?
To begin, let's tackle the fundamental question – what is Ethereum?
As previously suggested, the term “global computer” is remarkably apt in contextualizing Ethereum. In technical parlance, Ethereum serves as a public blockchain software empowering users to establish intermediary-free projects using smart contracts and its native cryptocurrency Ether.
That's a lot to take in, but let's elucidate with an example.
Imagine you wish to sell your car. Currently, options available seem less than ideal – selling it yourself entails engaging with multiple individuals and showcasing the car, while utilizing a car-selling service would result in considerable commission and intricate paperwork after the sale.
Just when these options appear daunting, you stumble upon a revolutionary service – a platform facilitating commission-free car sales without any bureaucratic hassles. Once the transaction is complete, the platform secures a nominal fee and impeccably manages all related paperwork. The entire process is fully automated and visibly equitable!
In essence, this is achievable through Ethereum and smart contracts. To delve deeper into the latter, our Crypto 101 Handbook provides an exhaustive section elucidating the nuances of smart contract functionality. For now, understand that smart contracts were initially introduced on Ethereum to act as intermediaries in various processes (e.g., car sales).
The novelty lies in smart contracts being automated, decentralized, and immutable – streamlining and expediting transactions!
Through relentless development and smart contract integration, Ethereum has secured its position as the second-largest cryptocurrency project post-Bitcoin. This pivotal achievement has thrust ETH and its revolutionary technology into the limelight! Notably, the concept of a “global computer” originated from smart contract functionality, adding another layer to the distinction between Bitcoin and Ethereum – smart contracts!
While exemplifying a singular real-world application of Ethereum technology, the potential applications are limitless. Ethereum has the potential to automate numerous processes and services, lending speed and equity. Numerous developers recognize this, choosing Ethereum's blockchain to materialize their crypto-native projects.
Further exploration into this side of Ethereum awaits – first, we delve into the evolution of this cryptocurrency venture.
The History of Ethereum
Ethereum emerged in 2015 after several years of intensive development.
Presently, Ethereum is synonymous with Vitalik Buterin, one of its co-founders among a collective of 8 individuals who initiated the project.
In the ranks of Charles Hoskinson (the Cardano founder) and the creator of Polkadot, Gavin Wood, you might wonder why Vitalik is the name most associated with Ethereum nowadays. The answer lies in the fact that Vitalik is now the sole remaining member of the original 8 founders who still dedicates to the development of ETH.
Throughout its journey, Ethereum has encountered numerous twists and turns, including a controversial past, predominantly due to issues with scalability and network fees. However, the most notable controversy that rocked Ethereum was a major hack in 2016 known as the DAO hack. This event led to a major split within the Ethereum community, resulting in a hard fork that birthed two separate blockchain projects: the current Ethereum and the original Ethereum Classic.
You may be intrigued by terms like DAOs, hard forks, and Ethereum gas. If so, be sure to delve into the dedicated segments within our Crypto 101 Handbook. The history of Ethereum is intriguing, but let's shift focus and delve into what Ethereum is used for, and how it operates.
Despite its past hurdles, Ethereum remains one of the most sought-after cryptocurrency projects globally, having laid the groundwork for decentralized finance and various cutting-edge blockchain advancements. Speaking of which, understanding Wrapped Ethereum is crucial. Check our dedicated section on wrapped coins, too.
So, what makes Ethereum stand out? Well, think of it as a reliable computer that supports a wide range of applications, similar to how Ethereum is a dependable platform for decentralized applications and crypto projects. This, coupled with a bustling ecosystem, makes Ethereum a popular choice for developers and users alike.
The allure of Ethereum is not just due to its smart contract functionality but also because of the vast and active community it has garnered over time. With the meteoric rise of DeFi, NFTs, and crypto gaming, Ethereum's user base continues to grow.
What lies ahead for Ethereum? Despite the emergence of new, seemingly superior networks, Ethereum retains its prominent status. The recent Ethereum Merge is now a reality, ushering in the era of Ethereum 2.0, which aims to tackle many of the network's issues, including the transition from Proof-of-Work to Proof-of-Stake.
The future of Ethereum is certainly an exciting one, and uncovering the latest developments within the Crypto 101 Handbook is a journey worth embarking on.
