People hear about Ethereum on a regular basis. Nevertheless, many of them have only a basic understanding of Ethereum. Without a doubt, it is a good idea to learn more about Ethereum.
It is an open-source, distributed software platform that is based on blockchain technology. Some people might be unaware that Ethereum has its own native cryptocurrency called Ether, as well as a programming language called Solidity.
If you are a fan of cryptocurrencies, it makes sense to take a look at BitiCodes.
It is worth pointing out that blockchain is a distributed ledger technology that keeps a permanent, tamper-proof list of records. One important fact: Ethereum is Bitcoin’s main competitor.
You also need to consider that Ethereum enables developers to build decentralized applications. Miners produce Ether tokens that can be used as a currency as well as to pay for usage fees on the Ethereum network. Moreover, the platform supports smart contracts, which are a type of digital contract.
What’s interesting, one of the co-founders of Ethereum, Vitalik Buterin, first described Ethereum in a proposal in 2013 that suggested adding a scripting language for programming to Bitcoin.
Also, its development was funded by an online crowd sale, which is crowdfunding done through issuing cryptocurrency tokens, and the project came online in July of 2015.
But how does Ethereum work?
It uses a blockchain network. The network consists of nodes — computers of volunteers who mine for the coin. Notably, the nodes produce the Ether tokens, and mining creates the cryptography upon which the currency is based. Because crypto mining demands the use of a computer’s resources, crypto miners are rewarded with Ether.
Furthermore, the Ethereum platform offers the computationally complete Ethereum Virtual Machine (EVM).
Ethereum Virtual Machine executes scripts around the world across its network of distributed public nodes. Besides, these nodes provide the processing power for decentralized applications developers create to run on the network. What’s interesting, developers may buy Ether to pay for the use of the network, or they can mine for the tokens themselves, becoming a part of the network. As a reminder, an internal mechanism called Gas sets the pricing of transactions on the network.
Inexperienced investors should keep in mind that smart contracts are carried across the network in the same blockchain that records the ledger of transactions for the Ether cryptocurrency. Moreover, these digital contracts can have conditions that run on scripts until fulfilled. Ethereum has built-in mechanisms to detect when an agreement is not fulfilled. It is possible to use smart contracts to exchange things such as properties, money, and stocks on the back of an Ether token.
Ethereum and its native cryptocurrency
As mentioned earlier, Ethereum is a blockchain-based network. Ethereum is a platform that developers can use to build applications and program the smart contracts on which virtual currency is based. As in the case of blockchain, Ethereum can be used for many different types of applications, including a number of financial uses.
Ether (ETH) is Ethereum’s native cryptocurrency. The world’s one of the most famous cryptocurrencies is bought and sold using the Ethereum platform. Moreover, Ether is one of many cryptocurrencies that can be traded using the Ethereum network. Ether is also used to reward miners when they add blocks to a blockchain.
This cryptocurrency supports the Ethereum network; it pays for computational services as well as applications built on the platform. Ether is described as the fuel that Ethereum runs on.
For instance, an application running on Ethereum requires resources to function. Developers use Eth tokens in order to fund an application and support it on the network.