Understanding the Ethereum Blockchain
The features inherent to Ethereum and its blockchain system are markedly different from other cryptocurrencies.
Compared to other crypto-based projects, the Ethereum blockchain currently provides a platform for the world’s second-largest digital currency called Ether (ETH). This digital currency is second only to Bitcoin and can serve as a means of payment between two parties without interference from a third party. However, many still have doubts about the Ethereum project and its feasibility in the long term. Others wonder: should I buy Ethereum?
If you are new to the Ethereum project, we urge you to read this article to understand better what the Ethereum blockchain offers. We will begin the article by explaining how a blockchain functions, what the Ethereum project is, and the Ethereum project’s applications.
What is Blockchain?
Blockchains serve as a decentralised register that captures all crypto transactions across a peer-to-peer network. Blockchain technology permits transactions to occur between two parties without the interference of a third party. It is essential to note that cryptocurrencies cannot function without blockchain technology.
For now, the primary application of this technology is for the transfer of cryptocurrencies. However, there are many potential applications for this technology in the future, like voting, settling trades, and many others.
Bitcoin uses its blockchain as a ledger for transactions. Unlike Bitcoin, Ethereum uses blockchain technology in a variety of unique ways. This brings us to our next question: what is the Ethereum project?
What is the Ethereum Project?
Before we consider what the Ethereum project is about, let’s take a brief look at the history of Ethereum. Ethereum was officially founded in 2015 by Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, Amir Chetrit, and many others. Its founders’ goal was to create a decentralised platform that functions without third parties controlling other parties’ activities.
Blockchains serve as a decentralised register that captures all crypto transactions across a peer-to-peer network.
According to Investopedia, “Ethereum is an open-source, blockchain-based, decentralised software platform used for its cryptocurrency, Ether.” Like Bitcoin, Ethereum has a digital currency that can serve as a means of exchange between two parties. However, the Ethereum project provides further features to its users.
Users can use the Ethereum platform to create smart contracts between parties. Similarly, this platform supports the creation of Decentralised Applications (Dapps) using the platform’s resources. Dapps design using the Ethereum platform is possible because the Ethereum platform also functions as a programming language that runs on blockchain.
To carry out any task on the Ethereum network, users must transact in Ether (ETH). This is because Ether is the digital currency of Ethereum. All transactions on the Ethereum platform are fueled by Ether, so the transaction fees on this platform are referred to as gas fees. The lower the transaction, the lower the gas fee. Similarly, the higher the transaction, the higher the gas fees.
Etheruem Blockchain Applications
As stated earlier, the Ethereum platform can create smart contracts and Dapps. You may then ask what smart contracts and Decentralized Applications (Dapps) are.
A smart contract is a type of contract executed by itself after all required conditions have been met. Usually, a smart contract’s terms and conditions are agreed upon between anonymous parties without the need for a centralised third party such as a bank controlling the transaction.
Similarly, all terms and conditions of a smart contract are written into lines of code and stored on the decentralised Ethereum network. The written code monitors and controls the execution of the smart contract. Similarly, the code monitors and tracks all transactions attached to the smart contract to ensure that all contract conditions are met.
Usually, a smart contract’s terms and conditions are agreed upon between anonymous parties without the need for a centralised third party such as a bank controlling the transaction.
The programming language used for writing the lines of code vary on the Ethereum network. The programming languages for writing smart contracts include Solidity, Vyper, and Bamboo.
When compared to traditional contracts, smart contracts are faster, cheaper, and secure. They also prevent undue influence from third parties. The applications of smart contracts are numerous and can be incorporated to provide decentralised services in financial services, healthcare, insurance, property ownership, and many other sectors.
Decentralised Applications (Dapps)
Another application of the Ethereum blockchain technology is the creation of Dapps.
As the name suggests, decentralised applications do not run on a central server. Instead, these applications run on the Ethereum blockchain which decentralises its servers, preventing the Dapps from having a central source. As a result, decentralised applications are not under the control of a single entity or organisation.
The application for Dapps is endless as they can be used for creating decentralized solutions in fields like eCommerce, insurance, and online banking.
The Ethereum platform offers users the first decentralised blockchain platform in the world. The Ethereum network is very safe and secure and provides users with the opportunity to enjoy transactions without third parties’ interference.
When compared to other cryptocurrencies, the Ethereum platform offers a lot to its users. Its blockchain technology is revolutionary. Similarly, the project has a solid team of developers and programmers behind it.
Presently the platform provides a digital currency for making decentralised transactions. Similarly, this platform provides users with the opportunity to enjoy smart contracts and decentralised applications.
In terms of potential the Ethereum platform is likely to see future growth. There are many applications for smart contracts in financial services, healthcare, insurance, property ownership, and many other sectors. Similarly, there are many uses for decentralised applications in fields like eCommerce, insurance, and online banking.