WHAT IS ETHEREUM?

What is Ethereum? What is its mechanism of action? In this article, let’s explore with COINSTRATEGISTS how Ethereum functions and delve into the most detailed information about ETH.

WHAT IS ETHEREUM?

Ethereum is a decentralized computing platform, open-source, based on blockchain technology. It can automatically execute smart contracts when specified conditions are met. Ethereum enables developers to build decentralized applications (DApps) and decentralized autonomous organizations (DAOs). Specifically:

– Decentralized Applications (DApps) are software applications that run on a distributed network rather than a single server, and can be written in any programming language.

– Decentralized Autonomous Organizations (DAOs) are organizations operated by members based on encoded rules, allowing all members to vote on important decisions.

THE OPERATIONAL MECHANISM OF ETHEREUM

Fundamentally, Ethereum’s blockchain operates similarly to other blockchains, consisting of a network of computers (nodes). To participate, nodes need to install Ethereum Client software like Geth or Parity and run the Ethereum Virtual Machine (EVM) to execute smart contracts.

When developing decentralized applications (dapps) on Ethereum, developers deploy smart contracts using the Solidity programming language. To execute smart contracts and transaction commands, the network requires a fee known as “Gas,” paid in ETH.

Once a transaction is executed, the network needs to verify its validity through Miner Nodes. These Miner Nodes adhere to a consensus protocol called Consensus to ensure independent and consistent network operation.

WHERE TO BUY AND SELL ETHEREUM (ETH)?

You can buy and sell ETH on cryptocurrency exchanges. In the cryptocurrency space, there are two main types of exchanges:

• Centralized Exchanges (CEX) are exchanges that are third-party controlled and act as intermediaries for crypto asset exchange, for example: Binance, OKX, Kucoin, …
• Decentralized Exchanges (DEX) are non-custodial exchanges that operate on blockchain platforms. For example: Jupiter, dYdX…

– Join telegram channel here

– Learn more what is Bitcoin?

THE DEVELOPMENT OF ETHEREUM

The following organizations play crucial roles in advancing the entire Ethereum ecosystem, including the following three:

• Ethereum Foundation, a nonprofit organization established in 2014 and based in Switzerland, responsible for developing the features of the Ethereum Blockchain.
• Enterprise Ethereum Alliance (EEA): An organization promoting and expanding the use of Ethereum blockchain technology for enterprises.
• Consensys, a significant company within both Ethereum and the cryptocurrency market, is the parent company of Metamask, Infura, and CodeFi, providing tools and applications to support projects running on the Ethereum platform and other EVM chains.

THE TRIO LEADING ETHEREUM

Currently, Ethereum is guided by the Ethereum Foundation, developers, and the community, all aiming to solve the blockchain trilemma and promote Ethereum’s mass adoption.

However, achieving this goal requires considerable time. Every change on Ethereum affects assets worth tens of billions of USD. Therefore, each upgrade is thoroughly tested on testnets before deployment on the mainnet. Following The Merge, Ethereum will advance into subsequent phases, each lasting from 3 to 5 years to complete

– The Surge (planned for 2023): Focuses on expanding network processing capabilities through Sharding.

– The Verge: Uses Verkle Trees to reduce proof size, thereby shrinking node sizes and enhancing Ethereum node accessibility.

– The Purge: Reduces storage requirements for verification, eliminates historical data and bad debts to optimize storage and reduce network congestion.

– The Splurge: Upgrades and bug fixes to ensure smooth operation of Ethereum post the preceding 4 upgrade phases.

BENEFITS OF SMART CONTRACTS

This is a key feature of Ethereum, allowing users to program conditions to automate transaction rules and interactions.

For example, person A decides to borrow 1,000 tether (USDT) from person B only if B sends 2,000 dollars’ worth of ether as collateral. By using a smart contract, A can define independent verification conditions for this agreement, rather than relying on an intermediary broker.

If executed correctly, the smart contract will automatically release 1,000 USDT to B after he sends and locks 2,000 USD as collateral. Furthermore, when A repays the loan, the smart contract will release the collateral and return the borrowed amount to B.

Thus, smart contracts address the concerns of both A and B without needing mutual trust, reducing risks, and eliminating intermediary service fees or upfront deposits before they engage in peer-to-peer transactions (P2P).

CONCLUDE

This is the basic knowledge that COINSTRATEGISTS has compiled for you, what is Ethereum? and how the mechanism works. Hopefully through this article you have a more comprehensive view of ETH and the cryptocurrency world in general, thank you for reading this entire article.