What is Ethereum?
Ethereum is a blockchain-based, open-source, decentralized software platform used for its own cryptocurrency – Ether (ETH).
However, Ether and Ethereum are terms used interchangeably in general – many people refer to the Ether (ETH) cryptocurrency as Ethereum.
But there’s a lot beneath the surface that we are going to explore today. So, what is Ethereum you ask? Let’s find out!
What is a Blockchain-Based Software Platform?
But before we begin exploring What is Ethereum, we should have a basic understanding of what a Blockchain-based software platform actually is.
Blockchain-based software is deployed on several computers at once. Each of the computers connected to the Blockchain network has a copy of the blockchain.
This decentralized nature makes it so that any changes to the Blockchain requires widespread agreement. Thus, making it very secure.
The Ethereum Platform
The Ethereum platform operates similarly to its closest rival – Bitcoin, in a sense that both are decentralized blockchain suite of software. Both of them keep a record of transactions.
However, the Ethereum platform allows developers to develop their own applications using the underlying architecture as Ethereum. Such apps developed using Ethereum are called dapps.
Dapps are just open-source software that uses Blockchain to function. They use scripts of code called smart contracts which can facilitate the exchange of money, content, shares, or anything that has value. Ethereum Virtual Machines or EVMs are used to form smart contracts.
Once smart contracts are running on the blockchain, they can work without any external influence or downtime.
Is Ethereum a Cryptocurrency?
Even though it is generally referred to as Ethereum, the Ether is what fuels the Ethereum platform. The word Ethereum refers to the digital platform itself, and Ether refers to the cryptocurrency.
Ether is the actual tokens involved in Ethereum transactions, used for payments on the network.
Is Ethereum Safe?
Even though a malicious actor stole $50 million worth of Ether in 2016 from the platform by exploiting a vulnerability in one of the third-party applications called the DAO, most of the software developed using blockchain is said to be very secure.
Even a major breach like that was recovered by the community, as they hard-forked the entire blockchain and reverted the transaction that led to the theft. Ethereum Classic continued as the original branch.
After forming alliances with big names in the software industry such as Microsoft, the Ethereum community has never looked more secure. So, to answer your question, is Ethereum safe? The simplest answer would be YES, as long as you know what you are doing.
How is Ethereum different from Bitcoin?
Even though they look similar for most people, there is a key difference between Ether and Bitcoin. Bitcoin is a straightforward payment system, only allowing the exchange of currencies.
The applications of Ethereum are wider, in the sense that developers can utilize the platform to create use of their own. To summarize, here are the key differences between Ethereum and Bitcoin:
- If you are a developer, you can raise funds for your application using the Ethereum platform. By setting up contracts, you can seek pledges from the community.
- The total number of Bitcoin is finite (Around 21 million). Issuance of Ether is capped at 18 million per year, this causes relative inflation to decrease every year.
- Both Bitcoin and Ethereum cost their transaction in different ways. For Bitcoin, transactions compete with each other and are limited by the block size. With Ethereum, the cost of transactions varies with bandwidth usage, storage requirements, and complexity.
The founder of Ethereum, Vitalik, revealed the plans for Ethereum 2.0, also known by the name Serenity. It is expected to reduce some of the transaction costs on the Ethereum network significantly.
To do so, the team behind Ethereum has planned several major forks of the Ethereum blockchain. Some of them may also include structural upgrades!
These three levels will form the backbone of Ethereum 2.0:
- Main Chain: This is the original Ethereum blockchain
- Beacon Chain: This level will be dedicated entirely to overall coordination and validation using the PoS consensus.
- Sharding Chain: This level includes smart contract executions and data storage.
So, in summary, what is Ethereum?
The Ethereum is an exciting platform for developers to utilize the capabilities of blockchain while building open-source applications.
It is a decentralized, blockchain-based open-source platform for developing applications that utilize the future of digital currency and security.
With the vision of enabling fully digital and secure payments in the real world, removing the monopoly of data, and removing theft of data for tailor-made experiences, the future looks bright for Ethereum as a platform.
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