Exploring Ethereum (ETH): Understanding its Mechanics and Functionality

What is Ethereum and How Does It Work?

Cryptocurrency has been the talk of the town for a while now. Bitcoin, the world’s largest cryptocurrency, has paved the way for the development of other cryptocurrencies. Ethereum (ETH) is the second-largest cryptocurrency, and it serves a different purpose than Bitcoin. Ethereum is a global, decentralized blockchain-based platform that runs on peer-to-peer network technology. With smart contracts, this technology helps to build apps and organizations, stake or hold assets, transact and communicate without the control of centralized governance.

What is Ethereum and its Uses?

Ethereum was created as a decentralized network for running smart contracts. The concept behind this is to create more decentralized applications that are more secure, transparent, and censorship-resistant. Those applications do not rely on a centralized body or an organization. Ethereum blockchain is also behind the supporting layer for many smart contract-based applications. Some application uses of Ether are dApps (Decentralized applications), NFT (Non-fungible tokens), DAOs (Decentralized autonomous organizations), Games & Virtual Worlds, and Social Networks.

Who Invented Ethereum?

The inventor of Ethereum blockchain and cryptocurrency, Vitalik Buterin, is a Russian-Canadian programmer. Vitalik got involved in the Bitcoin space in 2011. He wrote the Ethereum whitepaper explaining the background and the concept of Ethereum in November 2013. Vitalik together with Joe Lubin, the founder of blockchain software company CosenSys, launched the Ethereum platform in 2015.

How Does Ethereum Work?

Ethereum network is built on an array of individual computers worldwide also known as a decentralized computer network. The computer users participate as “nodes” to help run the decentralized network making it difficult to hack for attackers.

With the help of a distributed ledger called a blockchain, the Ethereum network manages and tracks the interactions. These interactions are considered transactions and recorded within the blocks on the Ethereum blockchain.

It is the miner’s duty to validate these blocks before confirming them to the network and writing transaction history to the digital ledger. This verification method is called the proof-of-work (PoW) consensus method. Miners require computational power to verify each of these blocks, which has a unique 64-digit code to identify it. With the computational power, miners solve the above code and prove it’s unique. For this proofing, miners are rewarded for their computation power.

To compensate for the miner, the user who initiates the transaction has to pay a fee called the “gas fee.” This gas fee is paid as a reward to the miner who validates the transaction. Approximately every 15 seconds, a new block is added to the Ethereum blockchain. Miners create Ethereum by creating these blocks and solving puzzles.

How to Get Ethereum?

You can buy Ethereum on a cryptocurrency exchange like Binance or Coinbase. Being a miner will also support your cause to get hold of Ethereum.

What is the Ethereum total circulating supply, and How Much Ethereum does Vitalik Buterin have?

Ethereum has a circulating supply of 122,051,508 ETH coins, and the maximum Ethereum supply information is not available. Vitalik disclosed his public Ethereum wallet in October 2018. His Ethereum wallet held more than 355,000 ETH. As the price of Ethereum varies day to day, the total value in USD also changes according to the market.

What is the Future of Ethereum?

The world’s second-largest cryptocurrency Ethereum has been going mainstream over the past years due to its use cases on NFT, dApps, etc. However, Ether has experienced some challenges. One of those challenges is the transaction speeds. In order to process more transactions with greater mainstream adoption, the blockchain should allow more transaction handling capacity. The Ethereum blockchain can only handle around 15 transactions per second at the moment. Visa, on the other hand, processes close to 24k transactions per second.

Ethereum with the most recent Eth2 update (Ethereum Merge) will see the light to reach more levels in the coming future. What is your opinion on Ethereum’s future? Leave a comment in the comment section below.

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