Ethereum is a decentralized blockchain platform that enables developers to build decentralized applications, also known as DApps. Launched in 2015, Ethereum is currently the second-largest cryptocurrency by market capitalization, after Bitcoin.
What is Ethereum?
Ethereum is a decentralized blockchain platform that supports smart contract functionality. A smart contract is a self-executing contract that can automatically control the transfer of assets between parties when certain conditions are met. These contracts are executed on the blockchain, ensuring that they are resistant to manipulation or censorship.
Unlike Bitcoin, which is primarily used as a digital currency, the Ethereum blockchain is designed to support a wide range of decentralized applications. Developers can use Ethereum to build decentralized applications for a wide range of use cases, including financial applications, games, social media platforms, and more.
How does Ethereum work?
Like Bitcoin, Ethereum uses a proof-of-work consensus algorithm to secure its network. Miners compete to solve complex mathematical puzzles in order to validate transactions and add new blocks to the blockchain.
However, unlike Bitcoin, Ethereum is also planning to transition to a proof-of-stake consensus algorithm. In a proof-of-stake system, validators are selected to validate blocks based on the amount of cryptocurrency they hold and have locked up as collateral. This is thought to be a more energy-efficient and environmentally friendly way to secure a blockchain network.
What is Ether?
Ether (ETH) is the native cryptocurrency of the Ethereum blockchain. Ether is used to pay for transaction fees and to incentivize miners to validate transactions and add new blocks to the blockchain.
Additionally, Ether is used as a funding mechanism for decentralized applications built on the Ethereum blockchain. Developers can raise funds for their projects by selling tokens on the Ethereum network.
What are ERC-20 tokens?
ERC-20 is a standard interface for tokens on the Ethereum blockchain. It defines a set of common rules that tokens on the Ethereum network must follow, making it easy for developers to create new tokens and for users to interact with them.
Many of the most popular cryptocurrencies and blockchain projects are ERC-20 tokens, including Tether (USDT), Binance Coin (BNB), and Chainlink (LINK).
Conclusion
Ethereum is a powerful blockchain platform that enables developers to build decentralized applications for a wide range of use cases. Its support for smart contracts and the ERC-20 standard have made it a popular choice for building new blockchain projects and cryptocurrencies.