What is Ethereum?
Ethereum is a decentralized network based on blockchain technology that has its own browser, programming language and payment system. The Ethereum platform allows users to run decentralized applications (DApps) and smart contracts without third-party intervention. On the official Ethereum website (ethereum.org), this network is introduced as follows: Ethereum is a decentralized platform for implementing smart contracts. There is no possibility of malfunction, censorship, fraud or interference of third parties for the programs that run on this network. If you want to see the job opportunities of the استخدام تریدر ارز دیجیتال, visit Cryptowords.
The purpose of Ethereum
The Ethereum network was created with the aim of decentralization, therefore, it allows users to enter information into the blockchain chain instead of storing their information in a limited space, in order to benefit from privacy in addition to high security.
Is Ethereum a digital currency? What is ether?
Contrary to popular belief, Ethereum is not a digital currency, but a blockchain-based network. The native cryptocurrency of this network is Ether, abbreviated as ETH. In fact, Ether is a token of the Ethereum network. Ethereum is like an Internet or an operating system that has its own programs and services, and since this network is decentralized, none of these activities are free, and all payments on this platform are made with Ethereum's own cryptocurrency, Ether. . Ether is used as a cryptocurrency to pay fees and charges on the Ethereum network.
This code incentivizes network nodes to continue to voluntarily confirm transactions, create blocks, and ensure network security. Ether is the second most popular cryptocurrency in the world after Bitcoin. Storage of Ether cryptocurrency is also done in digital wallets like Bitcoin. The price of Ether, like any other cryptocurrency, fluctuates according to the acceptance of the network among users, network developments and various events.
How is ether extracted?
To mine Ether, miners compete in a competitive environment to create each block. Through the CPU of their computers and mining devices, they solve complex mathematical equations and thereby create a new block. Miners receive rewards in the form of Ether for this process.
History of Ethereum
In 2013, Vitalik Buterin proposed to decentralize everything by presenting the white paper of Ethereum, but his plan was not taken into account. Then in 2014, he joined big developers such as Gwynne Wood and Charles Hoskinson to Development of the Ethereum platform with a more general programming language. Buterin, who was a fan of Bitcoin and wrote various articles for Bitcoin, after some time doubted the decentralization of Bitcoin and decided to create a platform where not only financial transactions are done, but any program without permission and Decentralized form can be implemented in it.
Ethereum network security
In the Ethereum network, no person, institution or organization is responsible for its management and control, and its management is done voluntarily and decentralized by nodes all over the world. These nodes are responsible for maintaining network security. The distribution of information among all nodes and the public nature of the data eliminates the possibility of any censorship and fraud in this network. This has made this platform, in addition to creating a secure environment for financial exchanges, provide its users with a decentralized network for implementing various smart contracts and implementing decentralized programs.
In the Ethereum network, only network nodes can register user information, and no other entity has absolute management and therefore access to user information. Therefore, the security of the network information is preserved and no changes or deletions occur in them, and if a change is to be made, it happens with the approval of all network nodes.
Since there is no central body responsible for controlling the Ethereum platform, all users' personal information is stored on their own personal system, and this prevents all information from being collected in one place and reduces the possibility of hacker attacks. If a hacker wants to attack the Ethereum network, he must have access to half of the nodes, which is very expensive and practically impossible.
Decentralized programs
Many programmers around the world design their applications in Ethereum space. Ethereum allows programmers and developers to implement their decentralized software on this platform. These programs are called decentralized because the power to control the program and its users' information is not in the hands of any specific person or organization, so there is no way to censor data in these software.
In programs such as YouTube, Twitter, and other social networks, user information, writings, photos, and videos are stored on a central server. In this situation, with any security threat against that server, the entire collection of information is at risk. In Ethereum, since the information of the users of these decentralized software is not registered on any central server, the possibility of hacking and theft of information is greatly reduced.
The main difference between this network and other such platforms is that the programs that are designed in a decentralized manner on this network will not be able to run on traditional central servers.
Smart contracts on the Ethereum blockchain platform
Smart contracts that are carried out on the Ethereum blockchain platform are actually a string of codes that include the conditions before and during the contract and all the provisions of this document and the conditions for its execution. These codings can be used to plan and determine the framework of various affairs, including the exchange of shares, currency, or anything else of value. These types of contracts operate automatically and cannot be changed or stopped after being concluded, in other words, these contracts guarantee full and accurate execution.
With the support of smart contracts, the Ethereum blockchain allows users to make their exchange without intermediaries and third parties, and the parties to the contract enter into the transaction directly. Smart contracts are programmed based on if-then, meaning that if the obligations of one side of the contract are fulfilled, the other side is also required to fulfill its obligations. In these smart contracts, they are implemented as long as the conditions mentioned in the contract are met, and no one can change the conditions of these contracts.
All nodes of the Ethereum network will have a copy of this contract on their system, so they will not be able to be stopped under any circumstances and at any time other than the designated time, and none of the parties will be able to make the slightest change in this document after the start of the contract. are not. The programming language of these smart contracts is Solidity.
Ethereum virtual machine EVM
The purpose of creating Ethereum is to become a global computer. This computer requires an operating system. Ethereum virtual machine EVM is the Ethereum operating system. EVM is the operating system that every network node must use simultaneously. The virtual machine allows users to run smart contracts and decentralized applications on the Ethereum blockchain. In the absence of this operating system, none of these will be practical. This machine has high processing power and takes this power from all the processors around the world that are connected to the Ethereum network. In other words, a virtual machine is a supercomputer that runs on the blockchain platform and converts user programs into understandable code for the blockchain and executes them on the Ethereum network.
The difference between Ethereum and Bitcoin
Although Bitcoin and Ethereum both operate based on blockchain technology and in a decentralized manner, their purpose and application are different from each other. Unlike Bitcoin, which is trying to change the online banking system and was created only for the purpose of digital currency financial markets, Ethereum, using its blockchain, tries to eliminate intermediaries so that each user can access information without the need or personal intervention. have self-access. Ethereum was created to become a global computer, a platform for running thousands of programs and smart contracts.
The programming language in Bitcoin and Ethereum is different, and the hash algorithm in Bitcoin is SHA256 and in Ethereum it is ETHASH. Another difference between Bitcoin and Ethereum is the time it takes to create each network block. In Ethereum, this process happens every 14 seconds, while it takes 10 minutes to create a block in the Bitcoin network. The speed of transactions is also different in these two networks. In Bitcoin, 7 transactions are done every second, and in Ethereum, 16 transactions are registered every second.
In Bitcoin and Ethereum, transfer of deposits and transactions are done through a peer-to-peer (p2p) system.
The cryptocurrency of both platforms is obtained through the mining process. Each of them has its own blockchain, and transactions and deals and contracts are carried out on the platform of both blockchains without intermediaries and without additional costs related to third parties. The security of these two networks is provided through encryption, and the transactions of these two networks are non-stop and irreversible.
Ethereum transaction fees
In order to make a transaction on the Ethereum network, users must pay a fee. In the Ethereum network, this fee is called Ethereum Gas, which is paid with the network's own native currency, Ether. The amount of Ether that is paid for the transaction is called Gas Limit, and the fee paid for Gas Limit is called Gas Price. The price of gas is represented by wei, and each wei is equivalent to 0.00000000000000000000000000000000000000000000 of Ethereum. Each transaction in Ethereum requires about 21,000 gas. In every operation on this platform, the gas limit is specified and determined in advance. The gas limit shows how much gas the user has to pay for each transaction. The amount of gas required for each transaction is almost fixed and determined in advance, but its price is not known at all, therefore, each user announces their proposed amount for each gas. The higher the advance price of a user, the sooner miners or network nodes approve the requested operation of that user.
What is Ethereum Classic?
In 2016, the Ethereum network was attacked by a hacker and the hacker managed to steal about 3.6 million Ether units by using a bug in the code of one of the programs running on Ethereum called DAO. The developers of this network used the reverse hacking method to return the lost capital. The theft happened in block 192,000 Ethereum and about $50 million of user assets were stolen. To solve this problem, Ethereum developers designed a hard fork so that they can return the lost capital. With the help of this fork, they were able to access the stolen assets by blocking the transactions made by the hacker. But this hard fork created in the Ethereum network caused a difference in the Ethereum community and some people who were against the hard fork believed that the code is the law and no changes should be made in the blockchain to reverse the transactions. They believed that this would question the nature of decentralization of the network. For this reason, some people decided to work on the same previous version and the previous version was called Ethereum Classic. Now, Ethereum Classic is far away from Ethereum and is at the bottom of the cryptocurrency table with a sharp price drop.
What is Ethereum 2.0?
Ethereum is the largest decentralized application platform in the cryptocurrency market. As a result, it faces high congestion in the network. Therefore, Ethereum gas costs also increase and the cost of transactions increases. The Ethereum network has been transferred to the Ethereum 2.0 network with the aim of increasing the scalability of the network and also solving the problem of increasing gas costs. Ethereum 2.0 is actually an updated version of Ethereum. In this update, the Ethereum network no longer uses the proof-of-work (pow) algorithm to create a new block, and the confirmation of operations in this network is done using the proof-of-stake (pos) algorithm. POS deals with user capital as miners. Each miner must hold at least 32 ether (STAKE) in order to be able to be in the process of confirming transactions and creating a new block.
In the Ethereum mining method with the proof-of-stake algorithm, there is no need for advanced devices and consuming a lot of energy, and it can be mined with a simple system. This causes many people to enter many nodes in the Ethereum network, and since the security of the network is provided by these nodes, increasing their number increases the security of the Ethereum network.
This transfer is one of the biggest updates in the Ethereum network, which leads to an increase in transaction capacity, the speed of transactions, and a decrease in fees. In addition, less energy is spent in the production of new tokens and the validation of transactions, and Ethereum becomes more compatible with the environment.
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