Ethereum

Ethereum is a coin that uses the symbol ETH

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All About Ethereum

What is Ethereum, how does it work & why is it cool?

What is Ethereum?

Ethereum is a blockchain-based, open source computing platform and is the source of the cryptocurrency called Ether. However, Ether and Ethereum are freely interchanged and the popular name for this cryptocurrency is Ethereum and is denoted by ETH.

History of Ethereum

Ethereum was launched in 2014 by Vitalik Buterin, a former Bitcoin developer with the significant addition of scripting for application development. Two Swiss companies, Ethereum Switzerland GmbH and the Ethereum Foundation were involved during the development. In July 2014, Ethereum went public with the first crowdsale where people purchased Ethereum by paying through the predecessor, Bitcoin.

Ethereum introduced two concepts called Ethereum Virtual Machine (EVM) and Smart Contracts.

However, the security and scalability of Ethereum are hotly debated issues among the developers and users.

How Ethereum Works

Ether is a cryptocurrency which works almost in the same way as other cryptocurrencies like Bitcoin. However, there is one big difference.

Like Bitcoin, Ethereum is a peer-to-peer cryptocurrency without any central repository or governing administration. Thus, any transaction between two Ethereum wallets are done directly, with only the miner(s) getting involved to keep a record of the transaction.

However, in the Ethereum network, the nodes store the most recent ‘state’ (information on each user’s balance, their smart contacts and where it all are stored) along with all the transaction details.

While Bitcoin adds up all the spent and unspent pieces of change to calculate your account balance while Ethereum works much like bank accounts and your ‘tokens’ are in your wallet and can be transferred to the receiver’s account.

Why Ethereum?

It’s rather unfair to compare Ethereum with Bitcoin as they came out with different purposes and visions. However, Ethereum still has some advantages over Bitcoin, in direct comparison.

  • Decentralised Apps (DApps): Ethereum allows decentralised applications to build over the EVM and public nodes, something which is unique to this currency. Bitcoin and other similar coins are only interested in being the money of the internet” while Ethereum tries to become an integral mechanism of the internet itself.
  • Faster Transaction: Due to the fund transfer mechanism as described above, Ethereum transactions are faster because those are direct token (Ether) transfers between two accounts. The block time is 12 seconds and it also makes good use of finding Stale Blocks to complete any transaction swiftly with a confirmation coming within 20 seconds.
  • Cheaper Transactions: Ethereum is much cheaper than Bitcoins with 1 Bitcoin amounting to almost 45 Ethereum. Its easier to transact when the unit is smaller. Moreover, the transaction charges of Ethereum is not much either.
  • Safer Transactions: Ethereum allows the users to store the codes in distributed systems which means nobody can manipulate it. This is the Smart Contract concept we mentioned above. It makes Ethereum safer as well because the payment is issued only after this code is executed.

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