What is Ethereum?
Ethereum is the second most valuable digital asset in the world. It is a cryptocurrency that functions with blockchain technology and has its own network with no mediators as well as all other permissionless blockchain networks. Ethereum’s system operates with nodes or individuals from around the world, and has its own currency, ETH (Ether). It is designed to simplicize transactions, just like Bitcoin.
The utilization of this technology or functions on the Ethereum network requires the user to pay gas fees in order to register the information for transparency. The payment will be completed using the currency ETH, in which the amount will depend on the number of users at the time the utilization is being made, as well as the amount being paid or transferred.
Users are able to adjust the fees to their liking in order for the transaction or the utilization of the network to proceed faster, but they will not be able to overtake the order prior to theirs.
Prominent Points of Ethereum
The prominent point of blockchain networks such as Ethereum is its Smart Contracts feature, which allows the creation of Decentralized Applications (dApps). As of today, Ethereum has the most dApps functioning on its network on the market, having in total over 3,500 applications.
Due to the flexibility of its network, developers are able to develop applications with ease at any time they want. It is also very difficult for attackers to manipulate the network, because its users are decentralized and spread throughout the entire world.
The Ethereum network operates on a Proof-of-Work consensus algorithm basis, where miners have the duty to validate transactions and secure the network. In order to receive the right to validate a transaction, they will be required to solve complex mathematical equations with their computers and hardware, which can consume large quantities of electricity. The miners will then receive a reward in the form of ETH, which originates from the fees that users were required to pay.
Differences Between Ethereum and Bitcoin
The difference between Ethereum and Bitcoin starts from the intent of their creation. Bitcoin aims to deliver value from one person to another, while Ethereum aims to create a space for developers to expand the usage of their technology via Smart Contracts.
The Smart Contract function on Ethereum has a much more effective utilization than Bitcoin. Although Bitcoin could also be used to create Smart Contracts, it is highly unattractive due to the high fees. Additionally, the computer language that is used for the creation of Bitcoin is not easy to create Smart Contracts.
What is a Smart Contract?
A Smart Contract is a deal with certain properties needed to be met in order to complete a transaction or utilization automatically without any mediators. This makes it more convenient, faster, efficient and secure. Since it is done on a blockchain network, it is easily traceable. Smart Contracts are one of the main functions of a second generation blockchain.
What is ETH 2.0?
The latest project by Ethereum has an aim to make a transition from a Proof-of-Work system to a Proof-of-Stake system, which makes the network and its operations a lot faster than it already is. It also becomes much easier to expand the network and elevate its security. Additionally, it is a lot more efficient than Proof-of-Work.
In this change of systems, validators will come in place of miners in receiving the reward from the fees that were charged during a transaction or utilization.
Ethereum (ETH) is a digital asset ranked as the second most valuable asset in this market. It is a network that has the most developers and users for its Smart Contract function, allowing the development of Decentralized Applications (dApps) and Decentralized Finance (DeFi). It is a direct competitor to Bitcoin, with a different purpose.