Ethereum explained: what makes ETH different?
Ethereum is a virtual platform that uses blockchain technology. It allows the development of applications, the maintenance of assets and the use of its native cryptocurrency (the Ether, or ETH).
That is, Ethereum is a digital space where different operations can be carried out using ETH, a decentralised cryptocurrency.
It is important not to confuse Ethereum with its cryptocurrency, the Ether (identified with the initials ETH in the financial world). This is one of the most relevant digital currencies, alongside Bitcoin.
At this point, it is essential to have a couple of concepts clear. First, the blockchain is a decentralised database that is regularly updated and shared across multiple computers within the network. This ensures the existence of multiple verifiable copies of a public record of transactions, all stored in encrypted form, rendering the data incomprehensible to unauthorised parties.
Similarly, cryptocurrencies are digital currencies that leverage blockchain technology and enable online transactions. While they lack physical existence, their security is upheld by the aforementioned encryption techniques.
What makes Ethereum different?
What sets Ethereum apart in the world of cryptocurrencies is primarily its smart contracts. These are self-executing agreements that operate automatically once programmed, eliminating the need for intermediaries.
By programming the contract, the predetermined conditions agreed upon by the parties are established, ensuring their implementation is precisely as planned. For instance, the transfer of the agreed-upon funds occurs instantly on the specified date.
Ethereum enables the creation of these smart contracts, as well as decentralized applications (DApps). This means that programs can be developed to utilise blockchain technology for storing user information and governing the application’s functionality.
Another distinctive feature of the Ethereum platform is its ability to facilitate direct interaction between users to reach agreements and transfer funds.
Furthermore, Ethereum is not limited to application development alone; it also supports the creation of games and non-fungible tokens (NFTs). NFTs are unique files that provide proof of ownership for specific assets, all made possible through blockchain technology.
History of Ethereum
Ethereum was officially launched by Vitalik Buterin in 2015, although the project’s development began in 2013, with a proof of concept published in 2014. The funding for Ethereum’s development was achieved through a collective financing method known as crowdfunding, which took place between July and August 2014.
At the time of writing this article, there are two active branches of Ethereum: Ethereum and Ethereum Classic.
Similar to other cryptocurrencies, Ethereum has faced controversies and criticism, particularly regarding its environmental impact due to the ongoing energy consumption required by the network’s computers.
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FAQ
What is the difference between Ethereum and Ethereum Classic?
Ethereum and Ethereum Classic are two separate branches that resulted from a contentious hard fork in the Ethereum blockchain. Ethereum refers to the current and widely adopted version, while Ethereum Classic represents the continuation of the original blockchain before the fork.
Can Ethereum be used for more than just cryptocurrency transactions?
Ethereum is a versatile platform that goes beyond just cryptocurrency transactions. It enables the development of decentralized applications (DApps) and supports the creation of various projects, including games, non-fungible tokens (NFTs), and decentralized finance (DeFi) applications.
What are non-fungible tokens (NFTs) on Ethereum?
on-fungible tokens (NFTs) are unique digital assets that are recorded and traded on the Ethereum blockchain. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and interchangeable, each NFT represents a distinct item or piece of content, such as artwork, collectables, or virtual real estate.
