what is Ethereum and its importance

by anne jane in Blockchain on 5th December 2018

Ethereum is an open-source, blockchain system which is distributed among the thousands of computers around the globe. It runs on an OS called the EVM (Ethereum-virtual-machine). The EVM knows and executes the programming languages such as solidity. The platform which Ethereum uses is known as smart contracts. Besides, a smart contract is an application program that regulates the transfer of ETH among accounts if specific requirements are met.
Thus, there is no possibility of censorship, downtime, third-party interference, or fraud. It holds a revised version of Satoshi Nakamoto consensus through state-based transitions. Ethereum was introduced approximately in the year 2013 by Vitalik Buterin, who is a cryptocurrency programmer and researcher.

Similarities between Bitcoin and Ethereum

Ethereum is a shared blockchain network which is similar to Bitcoin. Though there are few essential technical differences between these two, the critical difference is to note that Ethereum and Bitcoin differ in capability and purpose. Bitcoin provides a specific platform of blockchain technology that is used as a peer to peer cash system. This electronic cash system helps in online payments of Bitcoins.

Having said that, Bitcoin enables in tracking the ownership of virtual currency while Ethereum concentrates on running the application program for any decentralized platform. In Ethereum, miners earn the Ether, a kind of crypto token that fuels the online network. Besides, developers use this Ether to pay for the services and transaction fees for Ethreum network. There is another kind of token which enables to pay the miners fees, including the activities in their block, which is called as gas.

Importance of Ethereum

Ethereum is an essential tool among many developers and entrepreneurs. They are used to create decentralized businesses which are not in existence prior. Ethereum Smart contracts are used for eliminating third-party users from various industries. This will lower the costs and provides more secured services or products. Ethereum is used in many varieties which includes decentralized registration, democratized crowdfunding, and SCM (Supply-Chain-Management).
Due to the need of Ether, the value of it has raised rapidly compared to the past years. This Ethereum now processes many transactions daily contrast to the Bitcoin. The number of businesses and applications are also growing at an exponential rate.

Smart Contracts

The main feature of there is smart contracts, that are usually individualized programs that promote the exchange of products for the value on the computer networks. This is stored on the blockchain. They perform usually when the particular requirements are met and have no downtime as long as the Ethereum network is running.

Ethereum virtual machine

Every time a program is run on Ethereum, it uses thousands of computer processes. Contracts that are used in writing a smart contract by a particular programming language. These languages are then compiled into bitcoin feature known as EVM or Ethereum Virtual Machine. This can be executed and read using the nodes. Note that, every node in the application creates a duplicate history of smart contract and transactions. Also, keeping the track of the current state.

Each time, people act on the nodes, that is on the network need to agree and then the change takes place. This network of miners and nodes aims to take the responsibility of transferring from different states. Instead of transferring from some authority like bank or PayPal.

Conclusion

Ethereum is thus a decentralized application which runs as a programmed network. By using this there will be no chance of frauds. Thus Ethereum is built and executed on smart contracts. Recently, there was an increase in Ethereum and is one of the promising cryptocurrencies. Outlined as a distributed global computer for storing and executing computer programs, the aim is to develop a distributed computing platform. This takes full benefits of all the blockchain technology.

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