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What Is Ethereum?

What Is Ethereum?

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Ethereum, at its simplest, is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. Released in 2015 by Vitalik Buterin, Ethereum has a native cryptocurrency called Ether (ETH). Being intrigued by blockchain technology at the age of 17 in 2011, Buterin imagined then later released a white paper on a platform that could go beyond financial uses in 2013 which ultimately become Ethereum. Is Ethereum similar to Bitcoin? Well, sort of, but not really.

Like Bitcoin, Ethereum is a distributed public blockchain network. Although there are some significant technical differences between the two, the most important distinction to note is that Bitcoin and Ethereum differ substantially in purpose and capability. While Bitcoin allows you to take part in a global financial network, Ethereum allows you to participate in a global computational network. With the usage of smart contract, there are wide potential applications in many different areas such as voting, global supply chains, medical and financial records can be built and run in Ethereum.

While Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application. Both Bitcoin and Ether are digital currencies, however, the primary purpose of Ether, unlike Bitcoin, is not as payment alternative but as a facility to monetize the working of Ethereum platform that enables developers to build and run applications.

Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network. Besides that, unlike Bitcoin, there is a second type of token called Ethereum gas that is required in the Ethereum blockchain to keep itself running and all transactions on Ethereum costs a certain amount of gas.

This Ethereum gas technology is introduced by Buterin to ensure there is no energy-wasting on long-winding transactions. Since every smart contract execution in Ethereum requires a certain amount of gas to be sent along with it to entice miners to put it in the blockchain, miners that maintain and secure the network will not only be rewarded with Ether but gas.

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As the amount of gas required in a transaction varies from the size of the transaction, miners will abandon the job if the gas received is too low.

This innovative feature that Ethereum has introduced to the blockchain community has brought upon a great impact on further development in the blockchain technology. Having being talked widely across the globe, Ethereum native currency, Ether (ETH) is now a second highest coin market cap and is anticipated by some to transcend Bitcoin as the world’s most popular cryptocurrency.

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