What is Ethereum (ETH)?

Ethereum is a decentralized platform that enables smart contracts and decentralized applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party. Launched on July 30, 2015, by Vitalik Buterin and other co-founders, Ethereum goes beyond the primary function of a cryptocurrency. It was the first blockchain project to install a Turing-complete programming language, Solidity, onto its blockchain, allowing developers to write smart contracts and decentralized applications that automatically execute transactions if certain conditions are met. Ethereum aims to be a global platform for decentralized applications, allowing users from all over the world to write and run software that is resistant to censorship, downtime, and fraud.

How is Ethereum useful?

Ethereum's primary contribution to the crypto space is its support for smart contracts and DApps. This functionality has paved the way for the development of a wide range of applications, from decentralized finance (DeFi) and gaming to supply chain management and identity verification. Ethereum enables developers to create financial instruments without the need for traditional financial intermediaries, offering a platform for launching new cryptocurrencies and tokens via initial coin offerings (ICOs). For users, Ethereum provides access to a global system of decentralized applications and financial services. For investors, it represents a valuable asset that has shown significant growth in adoption and ecosystem development.

How does Ethereum work?

At the heart of Ethereum's operation is the Ethereum Virtual Machine (EVM), which executes smart contracts and DApps. The platform uses a proof of work (PoW) consensus mechanism, similar to Bitcoin, but it is in the process of transitioning to a proof of stake (PoS) consensus called Ethereum 2.0, aimed at improving scalability, security, and sustainability. This upgrade will introduce shard chains to increase network capacity and reduce gas fees, which are costs associated with transactions and smart contract executions.

Ethereum's native cryptocurrency, Ether (ETH), is used to pay for transaction fees and computational services on the network. Unlike Bitcoin, which has a capped supply, Ethereum does not have a fixed limit on its total supply, with annual issuance limited by network consensus.

Major developments

Ethereum has undergone several significant developments since its launch:

• Ethereum 2.0 Phase 0 Launch: Marked the shift from PoW to PoS with the Beacon Chain launch.

• London Hard Fork: Included EIP-1559, changing the transaction fee market to include automatic fee burning.

• Full Ethereum 2.0 Transition: Ongoing phases focusing on sharding to improve scalability and reduce gas fees.

• Layer 2 Scaling Solutions: Increased adoption of solutions like Optimism and Arbitrum for enhanced transaction efficiency.

Ethereum faces challenges, including network congestion and high transaction fees, but its ongoing development and the active community continue to solidify its position as a cornerstone of the blockchain and cryptocurrency space.

If you wish to buy Ethereum, click here to enjoy the intuitive, user-friendly, and cost-effective crypto trading experience offered by BITmarkets.