What is a Ethereum and how does it work?
Ethereum (ETH) is a cryptocurrency built on blockchain technology. It was first launched in 2015 and since then, the price has been climbing steadily. Ethereum is often described as “the world computer” because it runs smart contracts – programs that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. These scripts are executed safely on the network and they cannot be altered once they have been written. In addition to currency, Ethereum can be used to create decentralized applications. Unlike centralized apps, these use tamper-proof ledgers to record transactions between two parties. Because of this, users no longer need to trust that their personal information won't be stolen or corrupted.
Ethereum is a decentralized platform that runs smart contracts and enables developers to build Dapps (decentralized applications). Developers use these apps to create a wide range of additional services that operate beyond the control of any single entity. These services are run by computers automatically without need for central oversight.
Smart Contracts
A contract is an agreement between two parties where terms and conditions must be met for a transaction to take place. In Ethereum, smart contracts have code that are written in Solidity.
Blockchain
The technology behind bitcoin was introduced to blockchain technology so people could send money directly to someone else securely via the Internet. By design, blockchains are designed to be public, distributed ledgers. Every computer connected to the network gets a copy of all transactions. An added feature is the concept of mining. When you get a reward for solving a computational problem, instead of getting paid by a bank or financial institution, you get rewarded with cryptocurrency.
Decentralization
A lot of centralized companies have tried to make changes, but they’re just not working out. The internet is the perfect example of how decentralization works. There is no government or company that can tell you what you can do online. However, the downside of this system is that if something does happen, there is no way to regulate it.
ERC20 Tokens -
ERC stands for “Ethereum Request for Comments.” They are similar to RFC standards that work in the tech world. ERC20 tokens refer to those types of tokens that can be bought and sold on exchanges using ETH.
ICO
Initial Coin Offering refers to the method startups raise funds initially before starting their business.
Dapp
Dapps are games, applications, platforms, etc. built on top of the Ethereum network that perform tasks previously only possible with centralized systems.
Ether -
Ether is the token associated with Ethereum. It's like Bitcoin's counterpart and its value fluctuates based on demand and supply.
Mining
Miners are people who solve problems related to the blockchain. They provide security and stability to the network.
Block time
Blocks represent each ten minutes interval in which blocks are created.
Transaction fee
This is the cost to move the currency back and forth. The higher fees mean less people want to spend it due to the high cost.
Wallet
Wallets are software programs that store your cryptocurrencies. Both private keys and seed phrases protect your coins.
Public Key Cryptography
- Public Key cryptography means that anyone can encrypt information, but you can decrypt it. So even though someone encrypted the message, you can still read it.
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