WHAT IS ETHEREUM BLOCKCHAIN

Ethereum is the second most popular and capitalized cryptocurrency after Bitcoin. The Ethereum blockchain acts as a platform for building decentralized applications. Let's talk in more detail about what Ethereum is, how it works and what opportunities it opens up.
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About Ethereum

Ethereum is a protocol on the basis of which it is possible to launch decentralized applications running on smart contracts. Ethereum (ETH) is the cryptocurrency of exchange within the ecosystem. The idea of Ethereum is to create and run various codes in a distributed network. The work of such codes cannot be stopped.
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How does Ethereum work?

Ethereum blockchain is a database designed to add information. If information is added, the data cannot be changed or deleted. Ethereum contains millions of transactions that are grouped into blocks along with smart contracts. Blocks form a sequence - a complete record of the history of Ethereum.

Ethereum captures everything that happens on the network in real time. A copy of each transaction is distributed throughout the network. Each node on the network (computer that running Ethereum software) keeps a copy of this history.

Ethereums’s database is synchronized through a decentralized network. This makes Ethereum available to anyone who can use the internet.

Ethereum smart contracts

A smart contract is a computer program that controls the transfer of digital assets between parties when certain conditions are met. Ethereum has a high level of functionality and provides the basis for smart contracts. Contracts on the Ethereum network support transactions and compliance in the digital environment.

Ethereum and gas

Ethereum Gas is a mechanism for additional fees. Gas is necessary for transactions and the operation of smart contracts. The average cost of gas is constantly changing. It depends on the miners. When the network is overloaded, the cost of gas rises, and when there is no activity, it falls.

Each operation requires a fixed amount of gas. The more complex the contracts, the more gas they ask for. In Ethereum, gas serves as a measure of computing power. Gas is designated as Gwei. One ETH is equal to one billion Gwei.

ETH is traded on exchanges, so its market value is constantly changing. Gas separates the cost of computational work in Ethereum from the market price of Ethereum. When a user makes a trade, user pays for gas in ETH.

ERC-20 Tokens

On the basis of the Ethereum output, packages for creating their own tokens are used. As a rule, Ethereum based assets are ERC-20 tokens. Before the creation of the standard ERC-20 protocol, each Ethereum token used a smart contract. Compatibility and support for such tokens was problematic, which is why an appropriate protocol was created. ERC-20 tokens can be stored and transferred in the same way as on the air.

ERC-20 tokens belong to the Ethereum network. They use an address format, are practiced within the Ethereum network, and are sent using Ethereum transactions. ERC-20 tokens, loyalty points, cryptocurrencies etc.

How to buy Ethereum

ETH can be bought from online exchanges (Prostocash, 60cek, etc.), mobile or online cryptocurrency wallets. You can find popular cryptocurrency wallets in our list. You can also buy ETH on centralized cryptocurrency exchanges (for example, Binance) or on decentralized exchanges (DEX).

Ethereum 2.0

Ethereum 2.0 is an update of entire Ethereum network. The second version of Ethereum should provide greater efficiency and scalability of the network. The main difference between Ethereum 2.0 is the use of the Proof of Stake (PoS) feature.

Ethereum network runs on PoW - proof of work. This is Ethereum's way of keeping the network secure and up to date. PoW is not highly scalable, so it requires more and more computing power. Scalability is the ability of a system to grow to serve more users.

Ethereum 2.0 runs on PoS – proof of stake. Changes to the network could reduce the risks associated with the possibility of centralizing of Ethereum blockchain. With centralization, a vulnerability in the blockchain is possible. Hackers can use these vulnerabilities to control a large portion of the hashrate (the total computing power of the network).

Ethereum 2.0 staking

Staking – locking ETH in a smart contract to receive a reward. In part, this is comparable to a bank deposit. Locked tokens help Ethereum network conduct transactions and generate new blocks. To become an Ethereum 2.0 validator, you need to lock up at least 32 ETH for staking.

Ethereum and DeFi

Decentralized finance (DeFi) is based on open blockchains source. In DeFi system, users interact with each other and with smart contracts through peer-to-peer networks (P2P) and decentralized applications (DApps).

The bulk of DeFi is built on top of the Ethereum blockchain. For example, many decentralized exchanges (DEXs) are based on Ethereum. On decentralized exchanges, users trade among themselves without intermediaries.

Conclusion

Ethereum blockchain offers a wide range of uses. On the basis of Ethereum, it is possible to create tokens, decentralized applications and exchanges etc. In terms of capitalization and value, ETH ranks second after Bitcoin, so the token is quite attractive for investment. The full-fledged launch of Ethereum 2.0 can seriously affect the development of the entire crypto industry, which will undoubtedly affect the value of the ether.

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