Definition
Ethereum is a decentralized blockchain platform that allows developers to build and run applications using smart contracts. Its native cryptocurrency is called Ether (ETH), which is used to pay for transactions and services on the network.
🤔 Understanding Ethereum
Ethereum is more than just a cryptocurrency.
While Bitcoin was created mainly as digital money, Ethereum was designed to be programmable. That means developers can build applications directly on its blockchain.
These applications can include:
- Decentralized finance (DeFi) platforms
- NFT marketplaces
- Blockchain-based games
- Token issuance systems
Instead of relying on banks or centralized companies, Ethereum allows software to run automatically through smart contracts — self-executing programs that follow predefined rules.
To use the Ethereum network, users pay small transaction fees called gas fees, which are paid in ETH.
Ethereum originally used a system called Proof of Work to secure the network. In 2022, it transitioned to Proof of Stake, which reduced energy consumption and changed how the network is validated.
Example
Imagine Ethereum as a global app store that no single company owns.
Developers can launch apps on it.Users can interact with those apps.But instead of paying Apple or Google, users pay small fees in ETH to process transactions.
If you send ETH to someone, mint an NFT, or use a DeFi app, the network processes that activity — and ETH is used to power it.
In summary
Ethereum is like the infrastructure behind a digital city.
Think of Bitcoin as digital gold — mainly a store of value.Ethereum is more like digital infrastructure — it provides the tools to build financial systems, marketplaces and applications directly on blockchain technology.
ETH is the fuel that keeps that city running.
Tell me more…
- What is Cryptocurrency?
- What is blockchain?
- What is Bitcoin?
- What Are Ethereum Gas Fees and Why Do They Change?
- What is a crypto exchange?
- How does crypto trading work?
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