Ethereum (ETH) is an open source/ public, decentralized computing platform. It is an open platform used by developers to create and deploy decentralized applications such as smart contracts. It is a DIY platform for decentralized programs otherwise known as Dapps. In other words, it’s a distributed public Blockchain network. Ethereum focuses on running programming code for any decentralized application and it is used to create smart contracts and other complex financial and legal applications.
Apart from Bitcoin, Ethereum is the second most known cryptoasset proposed in 2013 by VItalik Buterin who was earlier involved with Yoni Assia the CEO eToro in the creation of Colored Coins. Ethereum was introduced as a platform that could leverage the Blockchain to store and execute computer programs in an international network of distributed computers.
What is the Ethereum Blockchain?
There are Blockchains that came before Ethereum, but their operating systems were only created to exchange particular coded items over the transactions primarily the network’s supported currency. This was a feature that had a lot of room for expansion. Therefore, Vitalik saw this expansion opportunity and found a solution where developers would be able to customize the data they could send and store over the Blockchain network. To make this possible, the Ethereum Virtual Machine and Solidity a programming language was introduced to help develop customizable transactions known as smart contracts. EVM is a programmable blockchain that creates an abstraction level between the executing machine and the executing code.
Ethereum provides an easy way to create new tokens on Ethereum blockchain via various protocols available on the blockchain. There are various protocols that allow the creation of different configurations but the most popular is ERC-20. ERC-20 is a protocol that sets forth guidelines for creating new tokens without creating a new blockchain. ERC-20 tokens, as they are called, also provides compatibility with other tokens of the same kind and can be interchanged with other ERC-20 tokens. Ethereum blockchain keeps an account of ERC-20 tokens with ready functions that a coder can use to build the basic features and customize the supply.
Ethereum uses Gas, the lifeblood of the ecosystem. Every transaction on the Ethereum blockchain uses some amount of Gas. Gas is a unit of accounting that correlates with how much computational effort is required to conduct a transaction. It is not a token that can be owned but a part of the system which is deducted from the Ether when needed. Every line of Solidity code executed on the blockchain requires a certain amount of Gas. It is literally the Gas that runs the Ethereum engine, as a fuel.
Ethereum Gas Limit is the amount of Gas that a user has to specify to get the transaction executed. This Gas goes to the miners of the network as an incentive. There is a minimum limit of Gas required for a transaction, else the miners will not pick up the transaction for execution. A user can specify a higher Gas amount and then the extra Gas will be refunded to the user.
What are smart contracts on Ethereum Blockchain
Smart contracts is a phrase that describes a computer code that facilitates the exchange of content, money, shares, property or anything else that is valuable. Smart contracts running on a Blockchain becomes like a self-operating computer program that executes when certain conditions are fulfilled.
Smart contracts are safe because they can’t be tampered with and they run on the Blockchain exactly as they were programmed. This reduces the possibility of downtime, fraud or any third party interference.
The Casper Protocol
Vlad Zamfir, an Ethereum developer, came up with the Casper Protocol for moving Ethereum from Proof-of-work to Proof-of-Stake (PoS). Proof-of-work is considered by a certain section of the crypto community to be very inefficient and energy consuming.
Here the validators are not miners but users who “stake” their Ether tokens and therefore are invested to make no transactions from the “bad actors” go through. If a validator acts in bad faith, they can be immediately held accountable and their stake can be slashed.
Also, the validators get a reward for validating transactions just like miners but there is no usage of energy involved.
The impact of Ethereum on Blockchain technology
Ethereum smart contracts, token issuance, Ethereum Virtual machine and the Ethereum gas are some of the many features introduced to the Blockchain community. These features have made a significant impact on further development in the Blockchain technology.
Smart contracts are the new wave of technology consulting services. Numerous organizations have contracted firms that can implement transactions as smart contracts to help decentralize their network transactions. Smart contracts are being used in financial derivatives, supply chain and political party voting systems among many other things. They are the crypto craze and organizations in different sectors now have Blockchain departments to monitor and expand research on cryptocurrency technology.