What is Ethereum?
A Brief History of Ethereum
Ethereum was proposed as a next-generation blockchain by cryptocurrency researcher and programmer Vitalik Buterin in late 2013. It was implemented on July 30, 2015, using the “pre-mining” method, corresponding to 11.9 million virtual units.
What is Ethereum?
Ethereum is an open software platform where developers build decentralized digital applications and use blockchain technology to run those applications. It is an application that allows its users to make direct agreements and transactions to sell or buy goods and services and trade in a decentralized manner.
Ethereum is a ledger technology that companies use to make new programs. It is designed to be adaptable and flexible.
The main purpose of establishing Ethereum is to reduce system interactions and payments to a short time by using a program called smart contract, which we have mentioned before, and to minimize or even zero charges such as additional payments and taxes by eliminating third parties and intermediary institutions.
The currency abbreviation is “ETH”.
How Does Ethereum Work?
Ethereum has taken and developed Blockchain technology and is programmed to be used in a wide variety of fields, not just a record-keeping facility through smart contracts. The Ethereum blockchain not only stores the transaction list, but also the last state of the network. It is a system that provides an environment for creativity to many application developers. It stores a copy of all transaction history in the structure of Ethereum’s Blockchain. The major difference between the two is that nodes store the latest state of each smart contract as well as all ether transactions.
Ethereum has its own internet network, application platform and payment system. Application developers can publish their applications over this network and offer products to customers on Ethereum’s own application platform. They can provide these services without having to pay any commissions to put them into effect.
What is Ether?
Ether is the transaction token that facilitates transactions on the Ethereum network. All programs and services connected to the Ethereum network require computing power (and this computing power is not free). Ether is a form of payment developed for network participants to perform requested transactions on the network.
Diffrence Between Ethereum and Bitcoin
Ether is the world’s second largest virtual currency by market capitalization as of 2021. It is second only to Bitcoin (BTC) by market cap. Unlike Bitcoin, there is no absolute limit to total ether tokens — it constantly changes and grows according to demand.
Another key difference between the two is that while the bitcoin blockchain is just a ledger, contributors to the Ethereum blockchain can create “smart contracts” by adding more code to transactions. Thus, while transactions on the Ethereum network may contain executable code, data linked to bitcoin’s network transactions is often used only for record-keeping.
The time required to create a new block also varies between the two virtual currencies. A new block on the Ethereum blockchain can be confirmed in seconds, while the bitcoin equivalent takes minutes to form.
And most importantly, the general purposes of networks are different. As a secure peer-to-peer decentralized payment system, Bitcoin was created as an alternative to traditional currencies. The Ethereum platform was created to facilitate contracts and applications, and ether is the environment through which these transactions are made possible. Ether was never intended to be an alternative currency or replace other means of exchange. Instead, its purpose is to facilitate and monetize the operations of the Ethereum platform.
Theoretically, these two technologies should not compete with each other; The Ethereum blockchain actually supports bitcoin. Thus, although they are not functionally competitive with each other as they were developed for different reasons and have different internal dynamics, both have attracted large amounts of investment from investors. Thus, it can be said that the two technologies are competing for investor dollars.
Why is Bitcoin Referred to as Digital Gold and Ethereum as Digital Silver?
Bitcoin is referred to as digital gold because it was the first cryptocurrency and the largest with a market cap of over $1 trillion, its limited supply (the maximum number of Bitcoins that can be mined is 21 million) can keep it valued. Ethereum is referred to as digital silver as it is the second largest cryptocurrency by market capitalization and has such a wide variety of applications as precious metals.
What is NFT in Brief
NFTs are tokens we can use to represent ownership of unique items. They allow us to symbolize things like art, collectibles, even real estate. There can only be one official owner at a time and they are secured by the Ethereum blockchain — no one can change the ownership record or copy/paste a new NFT.
Ethereum Enables NFTs to Work for Several Reasons:
• Transaction history and token meta-data are publicly verifiable — easy to prove ownership history.
• Once a transaction is confirmed, it is nearly impossible to manipulate that data to “steal” ownership.
• NFT trading can take place peer-to-peer without the need for platforms that can take large cuts as compensation.
• All Ethereum products share the same “backend”. In other words, all Ethereum products can easily understand each other — this makes NFTs portable between products. You can buy NFT in one product and easily sell it in another. As a creator, you can list your NFTs on multiple products at once — each product will have the most up-to-date ownership information.
• Ethereum never drops, so your tokens will always be available for sale.
What is DeFi in Brief
DeFi is short for Decentralized finance. It is a collective term for financial products and services accessible to anyone who can use Ethereum, that is, anyone with an internet connection. With DeFi, the markets are always open and there is no central authority that can block payments or block your access to anything.
Ethereum and DeFi
Ethereum is an excellent foundation for DeFi for several reasons:
• No one owns Ethereum or the smart contracts on it — this gives everyone the opportunity to use DeFi. This also means that no one can change the rules on you.
• Behind the scenes, all DeFi products speak the same language: Ethereum. This means that many products work together seamlessly. You can lend tokens in one platform and exchange the interest bearing token in a different market in a completely different app. It’s like exchanging loyalty points at your bank.
• Tokens and cryptocurrency are embedded in Ethereum, a shared ledger — tracking transactions and ownership is somewhat Ethereum’s business.
• Ethereum provides complete financial freedom — most products never take custody of your money and put you in control.
In Short
In our article, I briefly talked about Ethereum and what things Ethereum are used for. Thank you for reading.
Emre BAŞARAN
Sources:
https://en.wikipedia.org/wiki/Ethereum //Wikipedia-Ethereum
https://www.investopedia.com/terms/e/ether-cryptocurrency.asp //What is ether?
https://ozgurlukicin.com/teknoloji-haberleri/ethereum-nedir-ve-nasil-calisir/ //How Ethereum works?/Ethereum Nasıl çalışır?
https://ethereum.org/en/nft/#ethereum-and-nfts //Ethereum and NFT’s
https://ethereum.org/en/defi/#what-is-defi //What is DeFi
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