What is Ethereum? – Cryptocurrency Explained

What is Ethereum? – Cryptocurrency Explained


What is Ethereum? In 2013 the whitepaper for Ethereum was written
by Vitalik Buterin. The whitepaper described an open-source, public,
blockchain-based distributed computing platform that could run smart contracts: applications
that run exactly as programmed without any possibility of downtime, censorship, fraud
or third-party interference. Ethereum makes it possible for developers
to build and deploy smart contracts, as well as issue their own cryptocurrency directly
on the ethereum blockchain removing the need for the developers a create a new blockchain
for their service. This does not just save the developers the
time it takes to create a blockchain, it also gives them the security and decentralization
of Ethereum which is not something inherent to all blockchains. Smart contracts built on top of Ethereum make
use of Ethereum’s decentralized Turing-complete virtual machine, called the Ethereum Virtual
Machine or EVM for short. This is the part of the protocol that actually
executes the smart contracts/scripts. The EVM executes scripts using an international
network of public nodes, ensuring the platform’s censorship resistance. Scripts or smart contracts on Ethereum are
written using a new programming language built specifically for Ethereum called Solidity. To incentivize people to run nodes and execute
scripts, and to mitigate spam on the network, Ethereum has its own cryptocurrency, ether
(ETH). When you make an operation on Ethereum you
need to pay an execution fee. The execution fee you pay is called “Gas”
and is priced in ether. Gas measures how much work an action or set
of actions takes to perform, the more computations the operation requires, the more Gas it will
need. The amount of ether you pay per Gas is up
to you, but remember that nodes prioritize requests depending on how much they pay. With Ethereum comes benefits such as reliable
uptime. If a company’s server were to break, their
service would stop working, whereas if any given node on Ethereum stopped working there
would be many more around the globe keeping the service online. And the same goes for censorship, it’s much
easier for a malicious actor to shut down 1 centralized server than 100’s or 1000’s
spread around the globe. This protects the service, making sure it’s
always available for everyone in any part of the world. So in short, Ethereum can be seen as a blockchain
with a built-in programming language or like a consensus-based world computer that applications
run on top of because they value the benefits offered by Ethereum over the ones offered
by a normal server!

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