What is Ethereum: All You Need to Know
The Ethereum network is a decentralized platform for applications that run exactly as programmed without any possibility of fraud, censorship, or third-party interference. This creates a new way of trading and interacting with the world where people have more power than they do today. The traditional Internet does not provide this level of security and trustworthiness because it is centralized, meaning all data and applications reside on servers controlled by a limited number of companies.
1. What is Ethereum?
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third-party interference. Ethereum is powered by the Ether token (ETH), which can be traded on cryptocurrency exchanges for other cryptocurrencies or fiat currencies. Ethereum also allows for the creation of custom tokens, which can be used to represent assets or other forms of value.
Ethereum was created in 2015 by Vitalik Buterin, a Canadian programmer who wanted to create a more democratic form of computing than what is currently available.
2. How Ethereum works
Ethereum, like Bitcoin, is a cryptocurrency based on a blockchain. This means that the basic function is similar to Bitcoin. However, Ethereum offers significantly more possibilities, as contracts can also be stored and executed on the blockchain. The process by which transactions are verified also differs from Bitcoin. Ethereum works with a proof-of-stake procedure, which requires less energy than proof-of-work.
Ethereum is powered by Ether, a type of cryptocurrency that you can use to pay for goods and services or exchange for other currencies. To run programs on the Ethereum network, you need to use Ether (Gas) to pay for the computing power you use.
To use Ethereum, you need a wallet that can hold Ether. We have compiled an overview of different wallets for you here. Once you have a wallet, you can buy Ether on an exchange. The most popular wallets for storing Ethereum are the Ledger Wallet (hardware wallet) and MyEtherWallet (online wallet).
3. What can Ethereum be used for?
Ethereum enables the creation of decentralized applications from what are called Dapps.
Dapps are applications that run on a network of computers rather than on a single server. This makes them more secure and less likely to be censored than traditional applications.
Dapps can be used for a variety of purposes, such as:
4. What are the benefits of Ethereum?
Smart contracts and Dapps enable a variety of different applications. Ethereum offers several advantages over traditional applications and contracts. Some of the advantages of Ethereum are:
5. What are the risks of Ethereum?
As with many other cryptocurrencies, Ethereum has several risks that you should keep in mind. Some of the risks associated with Ethereum are:
6. Why Ethereum is unique
Ethereum is unique among cryptocurrencies because it allows you to create your own tokens on the ethereum blockchain. These tokens can represent any form of value and can be traded on the open market. Ethereum also uses a different algorithm than Bitcoin Proof-of-Stake instead of Proof-of-Work, which makes it more efficient.