If you have been studying the blockchain and cryptocurrencies, you probably know a bit about Bitcoin. Now, here is another one for all investors out there who are looking for a second option. We are talking about Ethereum here. Moreover, you will be amazed to know that it Is the second-most popular cryptocurrency today. It can give tough competition to Bitcoin. So, it may be the time you should know about the Ethereum technology in great detail.
What Is Ethereum?
It is nothing, but a blockchain-based computing system, that enables the creation of a decentralized ecosystem. The participants in this decentralized ecosystem, are the validators here. Furthermore, it has smart contract functionality. It is an application, which has been built on a blockchain to run safely, without downtime or fraud.
Ethereum is multi-functional in that developers can create distributed applications. It is the location for financial data storage, today. You will be amazed, to know that all the data is not stored on a single computer, but a network. It is stored on thousands of volunteer systems, across the globe. Each one is a node. When more than half the number of nodes get validation from the participants, any transaction is considered valid. The basis of all such transactions is Cryptography.
Features of Ethereum Decoded
- You can address Ethereum as a network, or blockchain, and its currency as Ether.
- Smart contracts form the basis of the transactions on the Ethereum network.
- The Ethereum Virtual Machine forms the backbone of the entire decentralized system.
- It allows you to create a decentralized application or DApps.
- It also allows you to create Decentralized Autonomous Organizations. You can use these for democratic decision-making.
You should also know about some of the additional features of the Ethereum Virtual Network in this context.
- Proof of Work
The entire history of a transaction is located on the network. The main goal of the miners on the Ethereum network is to validate the blocks. A hash value is created in the process, whose value has to be less than the predefined target. The block is verified after this value is ascertained. Then the miner also gets a reward.
There is another process that takes place here. It is another alternative to the proof of work function. A miner can validate the transactions, based on the number of currency or coins he holds. So, based on how many coins one is holding, the probability of mining increases.
This is the third feature of the Ethereum technology. It acts as fuel to run the blockchain. The intermediary money or fees that users need to pay to transact is called Gas fees. It is a measure of the computational power required to run a smart contract. It is usually paid in the form of Ethers.
Storage of Ethereum
You can store Ethereum in wallets. Furthermore, you can access such wallets on your smartphone or computer. There is a private key, which acts as the password. Today, you can utilize a wide range of wallets, like hardware wallets, paper wallets, desktop wallets, mobile wallets, and so on.
Applications of Ethereum Technology
You can find many real-world applications of the technology today. The first one seems to be Banking systems. Its decentralized nature has made it a top favourite today. No one can gain access to the system. The transactions of an Ethereum-based network are considered safe, and thus banks are also using it.
You can also form agreements, with the help of smart contracts on the Ethereum blockchain. It helps in the digital recording to statement, which none can alter. Other sectors are slowly realizing its benefits. Thus, it is a growing platform with massive fan-following today.