Welcome to Crypto 101 series by BTC365 Crypto Casino. Last week, we talked about Bitcoin. Today, we’ll discuss another commonly used cryptocurrency. In spite of being the second largest, Ethereum is much more than just a digital currency. It’s an open-source, blockchain-based platform that enables smart contracts and distributed applications (DApps) to run without any downtime, fraud, control, or interference from a third party.
In late 2013, a cryptocurrency researcher and programmer, Vitalik Buterin, proposed the development of Ethereum. The development was crowdfunded in 2014, and the network went live on 30th July 2015.
Ethereum aims to use blockchain technology not just for maintaining a decentralized payment network but also for storing computer code to power tamper-proof decentralized applications, known as “smart contracts.”
How does Ethereum work?
At its simplest, Ethereum operates using a blockchain. A blockchain is a digital ledger where all crypto transactions made in cryptocurrency are recorded chronologically and publicly.
Just like Bitcoin, the miners work to earn Ether, the crypto token that fuels the network. However, Ether is more than just a digital currency; developers use it to pay for transaction fees and services on the Ethereum network.
Smart Contracts: The Core of Ethereum
One of the key differentiators of the cryptocurrency is its use of smart contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code. The code and the agreements exist across a distributed, decentralized blockchain network.
Smart contracts allow trusted transactions and agreements to be carried out among anonymous parties without the need for a central authority, legal system, or external enforcement mechanism.
What are Ethereum’s Key Advantages?
Ethereum has a number of potential use cases, spanning decentralized finance (DeFi), supply chain management, and even voting systems. It provides developers with the flexibility to build and deploy a wide range of applications, including their own cryptocurrencies.
In a nutshell, Ethereum is an exciting piece of technology that has the potential to revolutionize many industries by making smart contracts a commonplace. As we continue to explore and harness the potential of blockchain technology, it is a platform that everyone should be watching.
Please note, investing in cryptocurrencies involves risks, as the value of cryptocurrencies can go down as well as up. Always do thorough research and consider seeking advice from financial professionals before making investment decisions.