What is Ethereum (ETH) ?

You've likely heard about this powerhouse cryptocurrency, but do you know what it really is? In this article, we're exploring what Ethereum is and what use case it provides to the blockchain industry. Spoiler alert: a big one. As the second biggest cryptocurrency and currently holding around 20% of the market share, now is an excellent time to learn about Ethereum.

What is Ethereum?

Ethereum is a blockchain platform that allows developers to create their own decentralized applications (dapps) and smart contracts. With the intention to build the blockchain industry, Ethereum provides a platform for anyone from any sector to incorporate blockchain into their business and harness the power of decentralized technology.

Smart contracts are digital agreements that automatically execute when the predetermined criteria have been met.

Using a decentralized network of computers to maintain and operate the network, much like Bitcoin, Ethereum is a computing platform. The network also allows for the digital transaction of value/money, as well as facilitating the creation of new cryptocurrencies.

What is ETH?

ETH, also known as Ether, is the digital currency that fuels the Ethereum network. Ethereum refers to the platform as a whole while ETH is the money that fuels it. When someone refers to the Ethereum price, they are actually referring to the price of ETH.

How does Ethereum work?

Ethereum is a dynamic, open-source software platform made up of several strong components. At its core is the Ethereum blockchain, which acts as the foundation for storing and recording transaction and smart contract data in blocks.

The network recently transitioned from a Proof-of-Work consensus to a more energy-efficient Proof-of-Stake model which changed the way that Ethereum works. While it remains a decentralized network with ETH as the native currency, the way in which the network is operated changed significantly. This change improved the network's overall energy consumption and sets the stage for future scalability and service enhancements.

With the PoS model, the network relies on validators (instead of miners) to confirm and execute transactions, with each validator needing to stake a certain amount of ETH in the network in order to participate. Staking involves locking ETH in the network, and acts as financial surety that validators will act with their best intentions.

The Ethereum network is powered by a distributed network of nodes that store transaction history and verify new data. These nodes run the Ethereum virtual machine (EVM), which executes and enforces smart contracts written in languages like Solidity and Vyper. With its versatile EVM, Ethereum can perform a wide range of tasks using its opcode-based bytecode.

Another feature of the platform is that it provides various token standards, for example, the ERC-20 and ERC-721, which define rules for creating and interacting with tokens. ERC-20 is for fungible tokens like cryptocurrencies, while ERC-721 is for unique non-fungible tokens (NFTs). These standards ensure compatibility with various networks and enable exciting possibilities for decentralized applications and digital assets built on Ethereum, particularly within the decentralized finance sector.

What gives Ethereum its market value?

Ethereum is currently the largest platform on which dapps and smart contracts can be created, and the most widely used. With strong leadership and an impressive community of developers behind the project, Ethereum has gained a reputation for being reliable, breeding innovation, and a positive force within the blockchain industry.

In terms of ETH, the cryptocurrency gains value through supply and demand. A small portion of ETH is also used to pay "gas fees" which allow any transactions on the network to take place. Any dapp created using the Ethereum platform is also required to pay these gas fees, making it widely used.

How is Ethereum different from Bitcoin?

When comparing the first and second biggest cryptocurrencies one must first understand that the two networks provide two different functions. While they can both be used as a medium of exchange, facilitating BTC and ETH transactions around the world in minutes, their primary use cases differ substantially.

Bitcoin was designed to provide a digital payment system that is free from any centralized control. The network offers peer-to-peer payments as well as a strong store of value, as the Bitcoin price has proven over the last several years.

Ethereum, on the other hand, was created to provide a computing platform on which people could create new decentralized applications on top of blockchain technology. The platform's intentions are to build the blockchain industry, allowing anyone interested to take part.

What is Ethereum used for?

Ethereum is most prominently used for the creation of dapps and smart contracts, however, users can also transfer value through the platform (ETH acting as a digital currency). ETH has also proved to be a valuable store of value, with many participants buying the token anticipating returns over a period of time.

Who founded Ethereum?

The idea of Ethereum was initially fleshed out in 2013 by a young crypto enthusiast, founder Vitalik Buterin, in a blog post. In 2013, he joined forces with several developers and entrepreneurs and started building the decentralized platform.

According to one of the founders, the initial founders of the decentralized platform were Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, and Amir Chetrit in December 2013. Joseph Lubin, Gavin Wood, and Jeffrey Wilcke joined in early 2014.

In 2014 a successful crowd sale was launched, selling 72 million ETH and raising around $18 million (at the time). The platform officially launched on 30 July 2015.

How do you buy Ethereum?

If you'd like to become involved in the Ethereum platform and own the digital asset that fuels the network, you will need to purchase ETH through a trusted crypto exchange platform and set up an Ethereum wallet. The Tap app offers a secure and convenient solution for this, providing users with several convenient payment options as well as an Ethereum wallet in which users can securely store the cryptocurrency.