Ethereum is often referred to as the second most popular cryptocurrency after Bitcoin, but unlike most virtual currencies, including Bitcoin, it aims to be more than just a means of exchanging and storing value, instead, it calls itself a network Decentralized computing based on blockchain technology.
How does ethereum work?
Authors David Roddick and Benjamin Currie, in a report published by the American magazine Forbes, say that, just like all cryptocurrencies, Ethereum relies on blockchain networks, which are decentralized blockchains, and distributed public ledgers in which the verification of All transfers are recorded.
This distribution takes place in the sense that each person participating in the Ethereum network owns an exact copy of the ledger, which allows everyone to see all previous transfers, and it is decentralized in the sense that the network is not managed or disposed by a central body, but rather is managed by all distributed ledger holders.
Blockchain remittances rely on cryptography in order to keep the network secure and to verify each transaction. People use computers to mine, ie solving complex mathematical equations to confirm every transaction on the network and add new blocks to the blockchain that is the heart of this system. Participants are rewarded. Using crypto coins, these coins in Ethereum are called “Ether”.
Ether can be used to buy and sell goods and services, just as with Bitcoin, and this currency has made rapid gains in its price in recent years, which makes buying it a real speculative process, but what makes Ethereum unique from others is that users can build applications that work on the block As software runs on a computer, these applications can store and transfer personal data and handle complex financial transactions.
The author quotes Ken Fromm, director of education and development at the Enterprise Ethereum Alliance, which is responsible for developing and deploying this network, “Ethereum is different from Bitcoin in that it is a network that can perform computational operations as part of mining, this simple computing power transforms a tool for storing value and a vehicle for financial exchange into an international decentralized computing engine and an open repository of verifiable data.
Ether and Ethereum
You can use Ether as a digital currency for remittances, investments, or even to store value. Ethereum is the blockchain network in which Ether is found and exchanged, but as we mentioned earlier, this network offers a variety of other functions.
The Ethereum network can be used to store data and run decentralized applications, rather than hosting software in a server owned by Google or Amazon, and thus control the data. This encrypted option gives users control over their data and they can act on it openly. There is no central party that can control everything.
But one of the most interesting uses of Ethereum is self-executing contracts, also called smart contracts, and just like any other contract, two parties make an agreement about providing goods or services in the future, but unlike traditional contracts, there is no need for lawyers here, as the two parties By encrypting the contract on the Ethereum network, and when the conditions stipulated in the contract are fulfilled, the consideration is automatically paid by sending the Ether to the service provider.
Ethereum and Bitcoin
The primary use of Bitcoin is as a virtual currency and for storing value. Ether does the same job, but the decentralized Ethereum network also enables additional things to be done, such as creating and running applications, entering into smart contracts and doing other types of transfers, all of which are features that Bitcoin does not have. You do limited jobs.
Ethereum also processes transfers faster, given that new blocks in the Bitcoin network are validated once every 10 minutes, while in Ethereum, it takes only 12 seconds, in addition, there is no limit on the number of Ether coins, as for Bitcoin, it will not It exports more than 21 million pieces.
Advantages of Ethereum
It can be considered that the advantages of Ethereum, in short, are summarized in the presence of a huge pre-existing network, which has been tried and verified over the years, with the adoption of funds worth billions of dollars. By avoiding intermediaries such as lawyers, banks and central regulators.
The problem of Ethereum is the continuous inflation in the cost of transfers, which is witnessing a record high of $ 23 per transfer in February 2021, and there is a possibility that it will be exposed to the problem of cryptocurrency inflation, and its owners may sometimes have difficulty understanding it and learning how to use it, and also still Her future is unknown, she continues to develop and improve and holds many promises, but uncertainty hangs over her future fate.