How Does Ethereum Work?

The concept of Ethereum was published by a Canadian programmer born in Russia Vitalik Buterin in 2013. Next year Vitalik received 2014 World Technology Award and also 100 thousand dollars from Thiel Fellowship.Ethereum was planned to become a decentralized blockchain-based platform for the creation and operation of applications. In 2015 after one of the greatest ICOs ever, the project was finally launched. Ethereum indeed inspired the crypto-boom of recent years. It has also broadened the use of blockchain. Not only cryptocurrencies can use this promising technology but also startups and applications – that was what Ethereum revealed. Flexible functional environment of Ethereum made it possible to create and operate blockchain-based apps even for those who were not IT-professionals and, thus, brought many startups to life. The Coin Shark will tell, how the platform works and how important is it for a modern information technology market and economy.


Ethereum is actually a decentralized software. A really large number of projects from investment funds and online-banks to online gambling apps were created on this platform within just several years. Many ICO-projects used Ethereum platform to issue their digital tokens.


Ethereum was the first project to use smart-contracts. This innovation is a special algorithm that enables users to make commercial deals. Smart-contracts can be written on special.programming languages, such as Solidity (similar to JavaScript), Serpent (similar to Python), LLL (similar to Lips) and Mutan. Smart-contracts are really a new form of economic and contractual relations that does not need either lawyers, courts or banks. Transactions are made directly between parties without agents and regulatory authorities. In case the contract is breached, it will just automatically become invalid. If one party does not make a particular algorithm the deal just won’t be done. Guarantees are really strong – it’s math. There are no ambiguous interpretation, no improper performance, no court bureaucracy – everything is carried out automatically. If you have taken part in ICO, you know that every initial coin offering uses smart-contracts.


Ethereum has its own decentralized digital currency called ether. Today this cryptocurrency has second-biggest market capitalization and is among top-3 world’s most expensive coins. Ether is a very promising currency that is already used by many users as an exchange and payment tool. Respectively, it is also pretty attractive to mine it. Unlike Bitcoin, it is possible to mine ether both using graphic cards (GPU-mining) and АSIC-miners. It is also possible to mine ether in the cloud, renting remote mining facilities.

 

Ethereum is more than just another cryptocurrency. It is a distributed software, blockchain-platform where everybody can create and operate applications. It is a programming environment and financial system. As Vitalik once said, Ethereum is not just about money, it’s an idea, that you want to follow.

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