What is Ethereum?
While Bitcoin revolutionized digital money, Ethereum took the concept of blockchain much further. Launched in 2015 by Vitalik Buterin and co-founders, Ethereum is a decentralized, open-source blockchain platform with smart contract functionality. It's often described as a "world computer" that can run a vast array of decentralized applications (dApps).
Beyond Digital Cash: Programmable Blockchain
Unlike Bitcoin, which is primarily a digital currency, Ethereum is a programmable blockchain. This means developers can build and deploy self-executing contracts and applications directly on its network. Its native cryptocurrency, Ether (ETH), powers the network and is used to pay for transaction fees (known as "gas").
- **Smart Contracts:** These are self-executing agreements with the terms of the agreement directly written into code. They run automatically when predefined conditions are met, eliminating the need for intermediaries.
- **Decentralized Applications (dApps):** Applications built on Ethereum are decentralized, meaning they run on a peer-to-peer network rather than a single server. This makes them resistant to censorship and downtime.
- **Ether (ETH):** The cryptocurrency that fuels the Ethereum network. It's used to pay for computational services and transaction fees, essentially powering the execution of smart contracts and dApps.
Ethereum's Evolution: From PoW to PoS
The Merge: Proof-of-Work to Proof-of-Stake
Ethereum initially used a "Proof-of-Work" (PoW) consensus mechanism, similar to Bitcoin's mining. However, in September 2022, Ethereum underwent a significant upgrade known as "The Merge," transitioning to a "Proof-of-Stake" (PoS) consensus mechanism.
- **Proof-of-Work (PoW):** Miners used powerful computers to solve complex puzzles, consuming significant energy.
- **Proof-of-Stake (PoS):** Validators are chosen to create new blocks based on the amount of ETH they "stake" (lock up as collateral). This mechanism is significantly more energy-efficient and aims to improve scalability and security.
Ethereum's ongoing development and its rich ecosystem of dApps, DeFi protocols, and NFTs make it a cornerstone of the broader blockchain industry, driving innovation in decentralized technologies.