- What is Ethereum?
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, Ethereum? Bitcoin is often described as digital gold which is a medium of value, a store of value, and a means of exchange used like gold on a global scale. Ethereum, on the other hand, is like a global, open source network that nobody owns and it lets developers build applications without any interference or censorshipThink of it this way;
Bitcoin is a calculator that does one thing like digital money very well
Now , Ethereum is like a smartphone that is capable of supporting thousands of applications or dapps as they are called.
How Does Ethereum Work? The Magic of Smart Contracts
The heart of Ethereum is called the smart contract. So, think of a vending machine, you insert $2 and press B5 and then the machine brings out a bag of chips. The cashier is not there but the machine contains built-in rules to perform that function. That is how a smart contract works. So smart contract is an equivalent of that in digital form.
For instance, suppose you want to bet on the weather, say you bet that it will be sunny and your friend says it will rain. Then, you and a friend deposit $10 in a smart contract. The contract is linked to a weather website. If it rains the next day, the contract automatically transfers the $20 to your friend. If it is sunny, it sends you the $20. Automatically no one can cheat or back out because the code is the rule.
What is Ether (ETH)?
To use the Ethereum platform for whatever you need it for, you need to pay a fee and that fee is paid in ethereum native token known as Ether or ETH.
People purchase ETH in the hope that its value would increase, its major function is to power the Ethereum network. So anytime you initiate a smart contract or carry out a transaction on the Ethereum platform, you will pay a small fee in ETH and this fee is what is called gas.
Why is Ethereum a Big Deal? What Can You Do With It?
Because ethereum can run smart contracts, it made it create a world of possibilities for those who use it. Why is ethereum a big deal? It is a big deal because of the following;
1). DeFi (decentralized finance): This function is like an online bank where you can lend your crypto to other people and you will earn interest from it. You can also borrow or trade some assets directly with someone else without involving a middleman.
2). NFTs (Non-Fungible Tokens): The NFTs are those digital arts that people sell for millions of dollars. Most of them are built on Ethereum. NFTs use smart contract to prove ownership of the digital artworks
3). Decentralized Apps (dapps): They are basically the apps that run on the ethereum platform or blockchain instead of running on a company's server and these apps include everything from games where you truly own it to social media platforms that no one can moderate or censor posts.
Ethereum Isn't Perfect: The Challenges
It is very necessary to note that ethereum is not perfect as it faces some challenges as well. The challenges it faced are
1). Speed and cost: Whenever the network is busy, the gas fees can become so expensive therefore making small transactions pointless.
2). Energy Consumption: the Proof of Work that the ethereum platform originally used is known to consume quite a lot of electricity which is somewhat similar to the energy consumption of bitcoin
In conclusion, Ethereum is definitely more than just a cryptocurrency like bitcoin or any other cryptocurrency out there. Its technology is more advance and it aims to create a more open, transparent and accessible internet for everyone. There is no doubt that it is complex but it is evolving and its potential to change how we interact in the digital world is mind-blowing. If you're curious about the future of the web, then Ethereum is a fascinating world to explore