How does Ethereum work?
To understand how Ethereum works, we first have to understand the concept of Blockchains. Blockchains are essentially a global network of computers that are connected to each other via the internet. There is no central computer or server that acts as an authority. Every computer on the network has an identical copy of the blockchain. Blockchains are decentralized databases that store data in specific “blocks”, with each block connected to the previous block via a timestamp. The data stored in blocks can include anything and can be used to store a variety of things, including contracts, financial transactions, medical records, supply chain records, voting data, and more. Each block also has a specific encrypted code, known as a “hash”, that links the block to its previous block on the blockchain, creating a chain of blocks that are “chained” together. This ensures that data cannot be altered retroactively and that the data stored on the blockchain stays secure. Ethereum is an open blockchain network that can be accessed by anyone on the internet.
Benefits of Ethereum
Ethereum is a decentralized platform that allows developers to build and deploy decentralized applications. The Ethereum platform enables the creation of “smart contracts”, which are self-automated contracts based on a computer program that runs exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. Ethereum’s smart contracts can be applied to a wide range of industries and businesses, including healthcare, supply chain management, real estate, insurance, financial services, and more. Ethereum’s blockchain offers users impeccable security, serving as a verifiable and unchangeable record of transactions. Transactions are verified by miners, who are rewarded for their work. Ethereum’s open-source technology also allows developers to build decentralized apps, which can be run on the blockchain without the need for a third party. These decentralized apps are increasingly being applied to a wide range of industries, including healthcare, supply chain management, real estate, insurance, financial services, and more.
Ethereum vs. Bitcoin
One of the most common questions about Ethereum is how it is different from Bitcoin. While both are decentralized networks, Bitcoin is a peer-to-peer electronic cash system that enables users to make instant and verified payments without the need for third-party services. Ethereum, on the other hand, is a distributed computing network that allows developers to build and deploy decentralized applications. While both networks offer security, reliability, and transparency, they are used for different purposes. Ethereum’s smart contracts are used to store information and data and are applied to a wide range of industries. Bitcoin, on the other hand, is used primarily as a digital currency. While both networks are growing and are expected to continue revolutionizing the way we transact and store data, Ethereum’s smart contracts and ability to host decentralized apps make it a more robust network.
The Ethereum Virtual Machine
The Ethereum Virtual Machine, or EVM, is the backbone of the Ethereum network. The purpose of the EVM is to execute the smart contracts on the Ethereum network. The EVM is a Turing-complete global network of computers that run on the Ethereum blockchain. The decentralized network of computers is run by miners, who are rewarded for their efforts with Ether, the digital currency used on the Ethereum blockchain. The EVM is programmed using a computer language known as “Solidity”, which is a widely used language for creating smart contracts. EVM is responsible for making sure that the terms and conditions of smart contracts are met. For example, if a smart contract is to pay out $100 if the price of Ether reaches $1000, the EVM will check the current price of Ether and make sure the contract is executed.
Ethereum’s Digital Currency
Ethereum has a native digital currency called Ether, formed as the result of a mining process called “Proof of Work”. The purpose of Ether is to fuel the network and reward miners for validating transactions on the network. The network is run by miners who are rewarded with Ether for their work. The Ethereum blockchain has a built-in programming language that enables developers to create decentralized applications. The applications run on the network, and they are not controlled or managed by a single entity. This makes the applications extremely secure, reliable, and transparent. Unlike Bitcoin, Ethereum’s digital currency is not used as a medium of exchange, but it is an essential part of the network that makes it run. Ether’s value has increased significantly over the past year, with its price reaching a high of more than $1800 in January 2018. This made Ethereum one of the most lucrative and profitable blockchain networks in the world.
Since its launch in 2015, Ethereum has continued to grow in popularity and has shown no signs of slowing down. More and more people are becoming aware of the blockchain network and its potential, and the number of people joining Ethereum is expected to increase in the coming years. The potential lies in the fact that Ethereum is a distributed computing network with a built-in programming language for decentralized applications. This makes Ethereum a very powerful and versatile blockchain network that can be applied to a wide range of industries, such as healthcare, supply chain management, real estate, insurance, finance, and more. Ethereum’s distributed network is powered by nodes, which are computers that validate transactions and make sure that the network is running smoothly. Anyone can run a node on the network, although it is important to note that running a node will require a certain amount of computer power and electricity, and is therefore not free. The more nodes are run on the network, the more powerful and decentralized the network becomes.