Ethereum is a blockchain-based software platform that can be used to send and receive value around the world through its native cryptocurrency, Ether, without any third-party interference. But it can also do much more than that.
First offered in 2013 by Russian-Canadian programmer Vitalik Buterin, Ethereum was designed to extend the usefulness of cryptocurrencies by allowing developers to create their own special applications. Unlike traditional apps, these Ethereum-based apps, known as “decentralized apps”, are self-executing through the use of smart contracts.
Smart contracts are code-based programs that are stored on the Ethereum blockchain and automatically perform certain functions when predetermined conditions are met. This can range from sending a transaction when a certain event takes place or lending funds after collateral is deposited in a designated wallet. These smart contracts form the basis of all decentralized applications (dapps) built on Ethereum, as well as all other dapps created on other blockchain platforms.
What are ether and gas?
Ether (ETH) is the primary token of the Ethereum blockchain and acts as the primary “fuel” that powers all activity on it. “Gas” refers to an amount of ether needed to perform a certain function on the network, such as:
The amount of gas you pay for each share on the Ethereum blockchain is calculated based on two things:
Cost of an operation on Ethereum = Cost of gas x Price of gas
How Ethereum Works
Like Bitcoin, Ethereum has its own blockchain where a global network of more than 2.4 million computers called “nodes” keeps a record of transactions. Anyone can run an Ethereum node and participate in network validation as long as they have the hardware, knowledge, and time to commit to it.
There are three main types of nodes that operate on the Ethereum network.
An easy way to understand the difference between miners and full nodes is to think of miners as archaeologists in the field uncovering historical artifacts and full nodes as trustees of a national museum who keep a record of all their discoveries.
The main difference between a full node and a full archive node is that a full archive node does everything a full node does but also compiles an archive of all previous states.
The Ethereum blockchain relies on miners to discover new blocks. They are like digital boxes that store transaction information and other data. Miners compete against each other using specialized computer equipment to earn the chance to be the next person to add a block to the chain and be rewarded with transaction fees (from the transactions they add to the block) and "Block rewards". Block rewards are new Aether Coins that are created when each new block is discovered and are given to the successful miner for their efforts. Once a block is added, the rest of the mining network checks it to make sure the balances are correct and the transaction is not a double spend i.e. someone doesn't don't try to spend money he doesn't have. The full nodes then record the final data.
However, unlike Bitcoin, full Ethereum nodes must also keep track of the "state" - or current information - of all of these applications, including each user's balance, all smart contract code, where everything is stored and any changes that are made. This means that running an Ethereum node requires a lot more storage and is expensive to run compared to a bitcoin node.
Here is a summary of what is stored in each node:
These contracts then need to be converted from high-level languages (which humans can understand) to low-level languages (which a machine can understand.) This is because a computing environment called the Ethereum Virtual Machine (EVM) is there. place where all smart contracts are deployed and executed. This EVM is built into every full Ethereum node and can execute over 140 different operation codes (opcodes). They are essentially machine instructions that can be chained together to perform virtually any task, which the term "Turing-complete" refers to.
The advent of smart contracts has led to the creation of decentralized autonomous organizations (DAOs) and a whole decentralized financial ecosystem, or “DeFi”, where traditional financial services such as loans, loans and insurance are now accessible. via peer-to-peer. Powered DApps.
Ethereum token standards
The Ethereum token standards are the token creation models that are compatible with the larger Ethereum network. These include tokens that can be swapped for each other (fungible) as well as tokens that are inherently unique and cannot be swapped with each other (non-fungible tokens, aka NFT). Ethereum token standards were invented by Ethereum developers to help users create new digital currencies easier, faster, and cheaper than starting from scratch.
While there are several different ERC token standards deployed on the ethereum network, three are commonly used:
Ethereum 2.0, also known as 'Serenity', is a major upgrade that aims to make the world's second largest crypto project faster, more efficient and more scalable by migrating the network from a proof of work proof of participation. system.
Dubbed "Casper," Ethereum's new Proof of Stake (PoS) system involves network users locking their coins to become network contributors, as opposed to using expensive and power-hungry mining equipment. Each staker is required to either lock 32 ethers or join a pool of stakes and combine their ether with others to participate in the creation of new blocks on the Ethereum PoS blockchain. The Ethereum 2.0 upgrade takes place in several phases. The former include:
Phase 0 was launched in December 2020 and the Beacon is a separate Ethereum blockchain that introduced a proof of stake system. He is also responsible for creating new blocks, verifying transactions, staking rewards, and managing new Ethereum blockchains known as “shard chains”.
In the next major phase of development, Ethereum's Beacon chain will tie into the Ethereum mainnet and replace the current energy-intensive proof of work system with proof of stake. Stakeholders in the network known as 'validators' will start producing blocks, verifying transactions and managing blockchain security in place of miners after the merger of Ethereum and Eth 2.0.
After the merger, additional, smaller upgrades will be required. The next task for Ethereum developers will be to activate sharding, which creates several mini-blockchains. Each shard will be responsible for verifying its own set of transactions rather than the entire network verifying each transaction. The Beacon Chain will act as the primary coordinator between these fragments, randomly assigning validators to each.
With both PoS and sharding enabled, Ethereum developers plan to make further adjustments to improve network security. This includes adding anonymity features to hide the identities of validators behind block proposals. It also includes leveraging new technologies such as the Verifiable Delay Function (VDF) to further secure the randomness of validator assignments and make it more difficult for malicious actors to disrupt the network.