What is Ethereum and what does it stand for
Computers have penetrated each aspect of our lives. They are automating many activities done by human beings. This is reducing the time taken to perform them. Like all software, Ethereum is also a piece of software. This is an open platform for distributed computing. It is based on the blockchain. It features smart contract functionality.
Vitalik Buterin proposed this technology. It was brought out in the year 2013 when Mr. Buterin was working on cryptocurrency research and programming. The development of this platform financed by a crowded sale that occurred. This happened between 2014, July and August. The system ‘premined’ more than 11 million coins for the sale.
How does it work
This platform provides us a complete machine in virtual form. This is called as the Ethereum, Virtual Machine. Using this machine, one can implement scripts through a global system of a public place. Every time ethereum works, it activates a network of thousands of computers. The activated computers are responsible for processing it.
Through Ethereum, one can modify contracts written in smart contract language into a ‘bytecode’ form. This is done so that the Ethereum Virtual Machine can read and execute the contracts. Thus, the working of Ethereum is an enigma in itself. Not only is the machine an enigma, but its working is also very special.
How is it created
Ethereal is relevant to the Bitcoin in that it has a block chain structure like the latter. All transactions within the blockchain use Ethereum as a medium. These transactions need to get approved by the miners, that’s why it takes some time for Ether to reach your recipient.
When a transaction is made, miners are solving complex mathematical equations, to make sure that the transaction is valid and there are three ways how to do it. Once solved, the result needs to be verified by 51% other miners in order to create a block of valid information. The blocks form a chain by referring to the hash or the fingerprint of the previous block.
The whole process of mining and verification is designed to use the agreement of transactions, called proof of work, so it would help to prevent fraud. The Bitcoin chain orders transactions by taking them into designated groups. Every block has a definite amount of online or offline transactions. It also has a chain to the earlier block.
Ethereum is created in the form of tokens by mining. Five ether specimens are mined per block. Ethereum is looking into other methods for its creation; purists are trying to come to a consensus about the validity of the current transactions. However, until new methods are found to create Ethereum, mining is likely to hold the platform together.
What is Ethereum used for
Ethereum, being an open source, public platform, provides a cryptocurrency token called as ‘ether’. This ether can be relocated into various accounts. It can also be used to reimburse the participating nodes for the computations performed. Thus, Ethereum is a technologically innovative currency, which can be easily transferred from one account to another.
It is very useful in countries, which rely heavily on digital payments. Therefore, it can be said that Ethereum is the currency of the future. Like the Bitcoin, Ethereum will also revolutionize the way business is conducted worldwide. However, for Ethereum to be successful, it will require a robust internet backbone.