Ethereum is a decentralized blockchain platform that enables the creation and execution of smart contracts and decentralized applications (dApps). It was proposed by Vitalik Buterin in late 2013 and went live on July 30, 2015.
At its core, Ethereum is a distributed ledger technology that operates on a network of computers (nodes). These nodes maintain a shared database called the Ethereum blockchain, which stores the transaction history and state of the network.
The key features and components of the Ethereum blockchain include:
Smart Contracts
Ethereum introduced the concept of smart contracts, which are self-executing contracts with predefined rules and conditions. Smart contracts are written in programming languages like Solidity and can automatically execute transactions and enforce the agreed-upon terms without the need for intermediaries.
Ether (ETH)
Ether is the native cryptocurrency of the Ethereum blockchain. It serves multiple purposes within the network. It can be used as a digital currency for transactions, as a unit of value to pay for computation and storage on the network (gas), and as an incentive for miners to secure the network.
Decentralized Applications (dApps)
Ethereum enables the development and deployment of decentralized applications. These dApps can offer various functionalities and services, such as decentralized finance (DeFi) applications, tokenized assets, gaming platforms, and more. They leverage the Ethereum blockchain’s smart contract capabilities to execute logic and interact with users and other dApps.
Ethereum Virtual Machine (EVM)
The EVM is a runtime environment that executes smart contracts on the Ethereum blockchain. It provides a sandboxed and isolated environment where smart contracts can run securely and deterministically. The EVM operates on a stack-based architecture and executes bytecode instructions.
Consensus Mechanism
Ethereum is transitioning from the current proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism called Ethereum 2.0. PoW involves miners competing to solve complex mathematical puzzles to validate transactions and add blocks to the blockchain. In PoS, validators are chosen to create new blocks based on the number of cryptocurrency tokens they hold and “stake” as collateral.
Interoperability and Standards
Ethereum has established various standards and protocols that promote interoperability and ease of development. The most notable is the ERC-20 token standard, which defines a set of rules for creating and managing fungible tokens on the Ethereum blockchain. Other standards like ERC-721 (non-fungible tokens) and ERC-1155 (multi-token standard) have also gained popularity.
Ethereum has played a pivotal role in the growth of decentralized applications and the broader blockchain ecosystem. Its programmable and flexible nature has fueled innovation and enabled the creation of a wide range of decentralized solutions across multiple industries.
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