Ethereum is often referred to as the second most popular
cryptocurrency, after Bitcoin.
It is a decentralized blockchain platform that establishes a
peer-to-peer network that securely executes and verifies application code,
called smart contracts. It has its native cryptocurrency called Ether and a
programming language called Solidity. Blockchain is a distributed ledger
technology that keeps a permanent, tamper-proof list of records.
How Does Ethereum Work?
Like all cryptocurrencies, Ethereum works based on a
blockchain network. A blockchain is a decentralized, distributed public ledger
where all transactions are verified and recorded.
It’s distributed in the sense that everyone participating in
the Ethereum network holds an identical copy of this ledger, letting them see
all past transactions. It’s decentralized in that the network isn’t operated or
managed by any centralized entity—instead; it’s managed by all of the
distributed ledger holders.
Ethereum Benefits
Large, existing network. “The benefits of Ethereum are a
tried-and-true network that has been tested through years of operation and
billions of value trading hands. It has a large and committed global community
and the largest ecosystem in blockchain and cryptocurrency.
Wide range of functions. Besides being used as a digital
currency, Ethereum can also be used to process other types of financial transactions,
execute smart contracts, and store data for third-party applications.
Constant innovation. A large community of Ethereum developers
is constantly looking for new ways to improve the network and develop new
applications. “Because of Ethereum’s popularity, it tends to be the preferred
blockchain network for new and exciting (and sometimes risky) decentralized
applications.
Avoids intermediaries. Ethereum’s decentralized network
promises to let users leave behind third-party intermediaries, like lawyers who
write and interpret contracts, banks that are intermediaries in financial
transactions, or third-party web hosting services.
What is next for Ethereum?
Ethereum is host to the vast majority of blockchain
applications and has a market cap of just under $200 billion, with over $55
billion locked into tokens on the blockchain. Popular stable coins such as USDC
and USDT mostly live on Ethereum today due to their network effects.
But a variety of new smart contract blockchains are beginning
to compete in the space. So while Ethereum is the dominant market leader today,
there is growing pressure for it to successfully execute the transition to
Ethereum 2.0.
Comments
Post a Comment