In this post, we’ll unpack all you need to know about Ethereum, defining exactly what it is, how it works, its main features, real world applications and more.
What Is Ethereum?
Ethereum (ETH) is a decentralized open-source blockchain network that enables developers to build and deploy decentralized applications (dApps) as well as the use of smart contracts.
How Does Ethereum Work?
Ethereum is built on blockchain technology — a decentralised, secure, transparent and immutable ledger that records transactions.
Ethereum also enable smart contracts. Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code. These contracts automate transactions without the need for intermediaries, thus increasing efficiency and reducing potential for disputes or fraud.
What Are The Main Features Of Ethereum?
The main features of Ethereum include:
- Decentralization: ETH is decentralized and thus is not owned or controlled by any one entity.
- Transparency: ETH transactions are public so can be viewed by anyone at anytime.
- Scalability: ETH is designed to be scalable so it can handle a large number of transactions.
- dApps: ETH enables decentralized applications that run on its network.
- Smart Contracts: ETH enables smart contracts which are automated contracts with coded terms.
- Ether (ETH): ETH has a native cryptocurrency referred to as “gas” which is used for transactions.
What Are Real World Applications Of Ethereum?
Ethereum’s use of smart contracts and dApps have countless and wide-ranging potential real world applications. Some of the most prominent include:
- Decentralized Finance (DeFi): ETH allows for DeFi applications which enable users to borrow, lend, save and invest money without the need for a central authority. Moreover, ETH has become the heart of DeFi.
- Non-Fungible Tokens (NFTs): ETH allows for the creation of Non-Fungible Tokens which represent ownership of digital assets and cannot be replaced. Moreover, ETH has become the heart of the NFT marketplace.
- Decentralized Autonomous Organizations (DAOs): ETH allows for Decentralized Autonomous Organizations which are member-owned communities without centralized leadership, where decisions are made collectively.
Ethereum is an open-source network built using blockchain technology. Its main features are decentralisation, transparency, scalability, dApps, smart contracts and finally its own native currency.
Ethereum’s real-world applications include the ability to facilitate decentralised finance, the ability to facilitate the creation of Non-Fungible Tokens and the ability to facilitate the creation of Decentralised Autonomous Organisations.