How does Ethereum work?
Ethereum is a decentralized blockchain platform that enables the creation of smart contracts and decentralized applications (dApps). At its core, Ethereum utilizes its own cryptocurrency called Ether (ETH) to facilitate transactions and operations on the network.
Blockchain Structure
Ethereum's blockchain is composed of blocks that contain transaction data, smart contract code, and state information. Every node in the network maintains a copy of the blockchain, ensuring transparency and security.
Smart Contracts
Smart contracts are self-executing contracts with terms directly written into code. They automatically enforce and execute agreements when predefined conditions are met, eliminating the need for intermediaries.
Consensus Mechanism
Ethereum originally operated on a Proof of Work (PoW) consensus mechanism but has transitioned to Proof of Stake (PoS) with Ethereum 2.0. This shift aims to improve scalability, security, and energy efficiency.
Decentralized Applications (dApps)
Developers can build dApps on the Ethereum platform using its programming language, Solidity. These applications run on the Ethereum Virtual Machine (EVM), which processes and executes smart contracts across the network.
Conclusion
Ethereum revolutionizes the way we think about transactions and agreements. Its blockchain technology, combined with smart contracts and decentralized applications, creates a robust ecosystem for innovation and financial services.