What is Ethereum? A Beginner's Guide to the World's Second Largest Cryptocurrency
Ethereum current price is $3,472.15 6.48% (24hrs)
Ethereum is a decentralized, open-source blockchain with smart contract functionality. After Bitcoin, it is the second-largest cryptocurrency by market capitalization. Ethereum is the most actively used blockchain.
First proposed in 2013 by Russian-Canadian programmer Vitalik Buterin, Ethereum development was crowdfunded in 2014 and the network went live with an initial supply of 72 million coins on 30 July 2015.
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In the world of cryptocurrency, Ethereum has emerged as one of the most popular and widely used platforms. Launched in 2015 by a young programmer named Vitalik Buterin, Ethereum has quickly become the second largest cryptocurrency by market capitalization, second only to Bitcoin. In this beginner's guide, we will explore what Ethereum is, how it works, and why it has garnered so much attention in the cryptocurrency world.
What is Ethereum?
At its core, Ethereum is an open-source, public, blockchain-based platform that enables developers to build and deploy decentralized applications (dApps). Unlike Bitcoin, which is primarily a digital currency, Ethereum is a platform for creating smart contracts and decentralized applications. These applications run on a custom built blockchain, allowing developers to create new tokens and interact with smart contracts.
Ethereum's native cryptocurrency is called Ether (ETH), and it is used to compensate participants who perform computations and validate transactions on the network. This means that Ether is not only a digital currency but also a fuel for the functioning of the Ethereum network.
Ethereum Virtual Machine (EVM)
One of the key features of Ethereum is the Ethereum Virtual Machine (EVM). The EVM is a Turing-complete software that can execute smart contracts. This means that any program can be run on the EVM, making it possible to create a wide range of applications on the Ethereum platform.
Smart contracts are self-executing contracts with the terms of the agreement directly written into code. These contracts automatically enforce the terms and conditions of an agreement, removing the need for a trusted third party to oversee the transaction. Smart contracts have a wide range of potential applications, from voting systems to supply chain management.
Decentralized Applications (dApps)
Ethereum allows developers to create decentralized applications (dApps) that run on the blockchain. These applications can be used for a variety of purposes, including financial services, gaming, decentralized marketplaces, and more. The decentralized nature of these applications means that they are resistant to censorship and fraud, making them highly secure and transparent.
Ethereum has gained widespread attention and adoption for several reasons. Firstly, its smart contract capabilities have opened up a whole new world of possibilities for developers, allowing for the creation of innovative and disruptive applications. Additionally, Ethereum's large and active developer community has contributed to its growth, with many developers and companies building on the platform.
Ethereum also provides a more flexible and versatile platform compared to Bitcoin. While Bitcoin is primarily used as a digital currency, Ethereum allows for the creation of a wide range of decentralized applications. This flexibility has made Ethereum a popular choice for companies and developers looking to explore the potential of blockchain technology.
In addition, Ethereum's proof-of-stake (PoS) consensus mechanism, which is currently being implemented, has the potential to make the network more energy-efficient and scalable. This upgrade, known as Ethereum 2.0, aims to address the scalability and security issues of the current Ethereum network.
Investing in Ethereum
For those interested in investing in Ethereum, there are several options available. Ether can be purchased on cryptocurrency exchanges and stored in a digital wallet. Additionally, there are investment vehicles such as Ethereum ETFs and trusts that allow for exposure to the cryptocurrency without the need to directly purchase and store Ether.
It's important to note that investing in cryptocurrencies carries inherent risks, and potential investors should conduct thorough research and seek professional financial advice before making any investment decisions.
In conclusion, Ethereum is a powerful and versatile platform that has revolutionized the world of blockchain technology. With its smart contract capabilities, decentralized applications, and active developer community, Ethereum has solidified its position as the world's second largest cryptocurrency. With ongoing developments and upgrades such as Ethereum 2.0, the future looks bright for Ethereum and its potential for continued growth and adoption in the cryptocurrency space.