Ethereum (ETH)
What Is Ethereum (ETH)?
Ethereum (ETH) is a decentralized, open-source blockchain platform that enables developers to build and deploy smart contracts and decentralized applications (dApps). It’s the second-largest cryptocurrency by market capitalization after Bitcoin and is known for its ability to support a wide range of applications beyond simple transactions.
How It Works
- Smart Contracts: Ethereum allows developers to create self-executing contracts with the terms of the agreement directly written into code. These smart contracts automatically execute when predefined conditions are met, reducing the need for intermediaries.
- Decentralized Applications (dApps): Developers can build dApps on the Ethereum blockchain, which operate without central control, making them more resilient to censorship or downtime. This opens the door for innovations in finance, gaming, and more.
- ETH as Fuel: Ether (ETH) is the native cryptocurrency of the Ethereum platform, used to pay for transaction fees, computational services, and to incentivize participants who validate transactions on the network.
Example
Suppose a developer creates a decentralized finance (DeFi) application on Ethereum that allows users to lend and borrow crypto. When a user takes out a loan, a smart contract automatically checks the terms, disburses the funds, and ensures repayment—all without a bank.
Key Takeaways
- Ethereum is a blockchain platform that supports smart contracts and decentralized applications.
- It allows for the creation of automated agreements that operate independently of central authorities.
- Ether (ETH) is used as the currency to facilitate transactions and incentivize network participation.
In short, Ethereum is a powerful platform that revolutionizes how applications and agreements are made, making processes more efficient and decentralized while allowing developers to explore a wide range of possibilities.
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