Ethereum is a computing platform based on blockchain technology. It gives developers the ability to build and deploy decentralized applications with no need for a “middleman.” We generally know it as being the second most popular form of cryptocurrency today.
Before you can jump into making ETH to USD conversions, it helps to know a little more about the product. Check out this guide below for the most relevant and important features of Ethereum.
Ether
Just about every platform these days has its own native cryptocurrency. Ether (ETH) is the native cryptocurrency of Ethereum. Think of it as fuel that helps the network run. It can be used to pay for transaction fees and computational resources that happen within the Ethereum network.
Similar to Bitcoin, the pioneer of cryptocurrency, Ethereum is a peer-to-peer currency. And like Bitcoin, it can be used to pay for any number of services. It can be used to pay for transactions made on the network or everyday things like gas. All deployed contracts ensure that transactions are executed seamlessly. Fees paid by the user go toward building smart contracts, making peer-to-peer payments, and building decentralized applications.
Smart Contracts
One of the best things about blockchain technology is that it is changing how traditional contracts work. Smart contracts are basically simple computer programs used to facilitate the exchange of assets between any two parties. That contract can cover shares, property, money, or digital assets that are being exchanged.
Even cooler, anyone on the Ethereum network has the ability to create smart contracts. The contract will have conditions and terms that have been mutually agreed upon by both parties. Once executed, smart contracts cannot be altered. Any transaction done after that will be registered permanently, even after modifying the contract in the future. They cannot be edited or changed under any circumstance. Smart contracts are a key component within the decentralized process.
Ethereum Virtual Machine
Also known as EVM, Ethereum Virtual Machine has been designed to compile and deploy the aforementioned smart contracts issued by Ethereum. Since contracts are written in the Solidity language, the EVM is used to fully understand the language within. Even better, it is a standalone environment where both development and testing can be done.
EVM uses bytecode, which is the programming language used in smart contracts. When the transaction has been created, it will go to the EVM, eventually validated through a proof-of-work consensus algorithm. By converting to bytecode, there is heightened security that will keep those transactions safe from potential cyber-attacks.
Decentralized Applications
Similar to other decentralized services or systems, decentralized applications work much the same. For instance, when you log into Facebook, a web application will render using HTML. The page will also access the API. The front end executes the backend while the API finds and retrieves that data from a centralized database.
Because the blockchain network is not decentralized – meaning it is spread across a variety of machines throughout the world – there is no singular entity that can control access. An application that qualifies as a decentralized app (Dapp) needs to be open source in order to qualify. It must also have a public, blockchain-based token that is used to run applications.
Ethereum shares many similar to trades to the more visible and popular Bitcoin. Safety and security are of the utmost importance in the blockchain and Ethereum qualifies as one of the safest cryptocurrencies on the market. Users are able to mine, sell, and buy cryptocurrencies in one convenient place and implement safety measures to keep that investment performing optimally.
