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Ethereum is an open-source blockchain-based platform that enables developers to build and deploy decentralized applications (dApps). It uses smart contracts, which are self-executing programs that automatically execute when specific conditions are met, to power its decentralized applications.
The platform also has its own cryptocurrency called Ether (ETH), which is used to pay transaction fees and computational services on the network. The main purpose of creating this new platform was to create an alternative solution for Bitcoin’s limited scripting language which only allowed basic functions like transferring funds from point A to B without any other complex operations or programs being executed within them.
With its Turing-complete programming language Solidity developers are able to write more complex scripts as needed by their application or project making it much more versatile than Bitcoin’s original script system allowing developers across many different industries including finance, banking, healthcare, insurance, and gaming etc. to build applications on top of its secure trustless immutable infrastructure layer known as “the Ethereum virtual machine”.
The journey of Ethereum, a revolutionary blockchain-based platform, began in 2013, when Vitalik Buterin, a respected computer scientist and co-founder of Bitcoin Magazine, unveiled his visionary Ethereum Whitepaper. This seminal document introduced a plethora of innovations that would differentiate Ethereum from other cryptocurrencies and emphasized how it could empower developers with sophisticated blockchain tools.
Buterin’s Whitepaper, published in late 2013, described a promising framework for creating decentralized applications (dApps) on the Ethereum platform. It was this revolutionary concept that truly kickstarted the Ethereum journey and set the stage for what was to come.
The development of Ethereum started in earnest in 2014, backed by robust crowdfunding efforts. It was on July 30, 2015, that the Ethereum network officially went live, marking a significant milestone in the history of cryptocurrencies.
Fast forward to September 15, 2022, Ethereum underwent a pivotal upgrade known as “the Merge”. During this transition, Ethereum’s consensus mechanism was switched from proof-of-work (PoW) to proof-of-stake (PoS), a move that slashed Ethereum’s energy consumption by an impressive 99%. This marked a new era in Ethereum’s history, reinforcing its commitment to efficiency and environmental sustainability.
Ethereum works by running a network of decentralized nodes that run the Ethereum software. These nodes are responsible for validating transactions and executing smart contracts. Ethereum uses a consensus mechanism called Proof of Stake (PoS) to validate transactions and create new blocks in the blockchain.
The EVM is a Turing-complete virtual machine that runs on every Ethereum node. The EVM is responsible for executing smart contracts. Smart contracts are self-executing contracts that are stored on the blockchain. They can be used to automate a variety of tasks, such as transferring money, exchanging goods, and voting.
DApps are applications that run on the Ethereum blockchain. DApps are not controlled by any central authority. They are open source and anyone can use or modify them.
No. You cannot mine Ethereum now. Since 15th September 2022, Ethereum has changed its consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS) due to which Ethereum mining is not possible anymore. This means that instead of miners, now there are validators who stake their ETH to participate in the network and earn rewards.
Validators are participants in the Ethereum network who stake their ETH to secure the network and earn rewards. Validators are responsible for storing data, processing transactions, and adding new blocks to the blockchain.
To become a validator, one needs to deposit 32 ETH to a smart contract and run a validator software that connects to the Ethereum network. This is also called Solo Staking. Validators can also join staking pools or use staking services if they don’t have 32 ETH or don’t want to run their own hardware.
Validators earn rewards for proposing and attesting new blocks, as well as for being online and available. The current annual percentage return (APR) for validators is about 6.5%. Validators can also lose rewards or get penalized for being offline, acting maliciously, or failing to validate correctly.
Ethereum staking pools are a way for users who have less than 32 ETH to stake their ETH and earn rewards by joining forces with other stakes. Staking pools delegate the node operation to a third-party and issue liquidity tokens that represent the staked ETH and the rewards it generates.
Some of the most popular Ethereum staking pools are:
Lido is a liquid staking protocol that allows users to stake any amount of ETH and receive stETH tokens in return. stETH tokens can be used in various DeFi applications and represent a 1:1 claim on the staked ETH plus rewards. Lido is the largest Ethereum staking pool with over 1.5 million ETH staked as of January 2022.
Rocket Pool is a decentralized staking protocol that allows users to stake any amount of ETH and receive rETH tokens in return. rETH tokens are also pegged to the staked ETH plus rewards and can be traded or used in DeFi. Rocket Pool is a community-owned and governed protocol that aims to be trustless and censorship-resistant.
StakeWise is a noncustodial staking service that allows users to stake 32 ETH or more and receive sETH tokens in return. sETH tokens represent the principal amount of the staked ETH, while the rewards are paid out in SWISE governance tokens. StakeWise also offers a pool option for users who want to stake less than 32 ETH and receive pETH tokens in return.
There are several ways to get Ethereum, including:
- Purchasing it on a cryptocurrency exchange such as Coinbase, Binance or Kraken
- Accepting it as payment for goods or services
- Staking it solo or by joining a staking pool. Another simple option can be to buy some Ethereum on an exchange and stake there.
- What is Ethereum's Shanghai Upgrade or Shapella?
- Shanghai Upgrade or Shapella is a hard fork (a big change to Ethereum network’s protocol) that was activated on 13th April 2023. Shanghai Upgrade fully switched Ethereum to a Proof of Stake network. Earlier in September 2022, Ethereum moved from Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism, however, users were not able to withdraw their staked ether. After Shanghai Update, now users can also withdraw their staked ether.
- What Is Ethereum (ETH)?
- Ethereum is an open-source blockchain-based software platform that enables the creation and execution of smart contracts. It is the world’s second-largest cryptocurrency by market capitalization after Bitcoin.
- Who created Ethereum?
- Ethereum was founded by Vitaly Dmitrievich Buterin, a Russian computer programmer and a prominent figure in the cryptocurrency industry.
- What is the native cryptocurrency of Ethereum?
- The native cryptocurrency of Ethereum is called Ether (ETH).
- What is the primary purpose of Ether (ETH) in Ethereum?
- Ether is the cryptocurrency of the Ethereum blockchain network. It is used for executing transactions and powering decentralized applications (DApps) on the Ethereum network.
- What is the difference between Ethereum and Bitcoin?
- While both Ethereum and Bitcoin are cryptocurrencies, Ethereum is a programmable blockchain that provides a platform for building decentralized applications.
- What are smart contracts?
- Smart contracts are computer programs built on a blockchain platform like Ethereum. These contracts run based on a set of predetermined conditions and execute actions when those conditions are met.
- What is the Ethereum Virtual Machine (EVM)?
- The Ethereum Virtual Machine or EVM is a runtime environment that executes smart contracts on the Ethereum network.
- What is gas in Ethereum?
- On the Ethereum blockchain, Gas is a unit of measurement that determines the computational effort required to execute transactions or smart contracts.
- What is the current block time for Ethereum?
- The average block time for Ethereum is approximately 15 seconds.
- What is the purpose of Ethereum 2.0?
- Ethereum 2.0, also known as Eth2 or Serenity aims to improve scalability, security, and energy efficiency by transitioning from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism.
- What are some decentralized applications (DApps) built on Ethereum?
- Examples of popular DApps built on Ethereum include Uniswap, OpenSea, Aave, Compound, MetaMask, and Decentraland.
- What is decentralized finance (DeFi) on Ethereum?
- DeFi refers to financial applications, exchanges, and services built on the Ethereum blockchain that aim to provide open, permissionless alternatives to traditional finance.
- What are non-fungible tokens or NFTs on Ethereum?
- NFTs are unique cryptographic tokens that can represent ownership of items like art, collectibles, and virtual real estate, and they are often minted and traded on the Ethereum network.
- Can I develop a decentralized application (DApp) on Ethereum?
- Yes, Ethereum is a developer-friendly platform to build and deploy your own DApps.
- What is the Enterprise Ethereum Alliance (EEA)?
- The EEA is a global organization that brings together businesses, startups, and academic institutions to promote the adoption and development of Ethereum for enterprise use cases.
- How can I get started with Ethereum?
- To get started with Ethereum, you can set up a wallet, acquire Ether (ETH), and explore decentralized applications and DeFi platforms within the Ethereum platform.
- What is the current price of Ether (ETH)?
- Ethereum Price (ETH INR) is subject to market fluctuations. You can check the current price on cryptocurrency exchanges or financial websites.
- Is Ethereum a good investment?
- Ethereum has gained significant attention and adoption in the cryptocurrency space. If you’re considering investing in Ethereum, it’s crucial to conduct thorough research, understand the risks involved, and seek advice from a financial expert.