Blockchain technology continues to revolutionize and drive the digital economy. A growing number of platforms are using this technology to optimize storage and transaction processes. Not only is it effective, but it also offers greater security to users. Platforms such as Ethereum choose to incorporate this technology. Although, in the case of this one, it not only uses it but has taken full advantage of it. That's why we want to delve into what Ethereum is and why it's one of the safest blockchain platforms of the moment.
What is the Ethereum blockchain?
Ethereum is a digital platform that uses blockchain technology and expands its use to a wide variety of applications. Ether, its native cryptocurrency, is one of the best on the market. And it's a token that can be used in transactions using this software.
This is the second most used blockchain network, after Bitcoin. Although the first works as a payment method and universal store of value, Ethereum is a sort of universal computer.
This means that its platform offers tools to build other things: digital tokens, smart contracts, decentralized applications of all kinds, decentralized payment bridges, decentralized autonomous organizations (DAO), suspicious crowdfunding offerings (ICO). And if you're a programmer, you can understand that there are no limits to the Ethereum blockchain network.
How does the Ethereum blockchain work?
To some degree, Ethereum's blockchain works in a similar way to bitcoin's blockchain. Because both programming languages allow developers to create software to manage their transactions. And as a result, they can automate certain outcomes. This software receives the name Smart Contract.
A traditional contract describes the terms of a relationship; in the case of a smart contract, it writes the terms in a code to ensure its fulfillment. These programs automatically execute the contract when these conditions are met. This eliminates the delay and cost of manually executing an agreement.
In other words, any Ethereum user can create a smart contract to send a set amount of ether on a set date. To do this, code is written on the blockchain, so that when the set date arrives, the ether can be despatched.
This can apply to more complex configurations, so it has unlimited potential. Projects such as insurance, real estate, financial services, legal services, and microfinance have made remarkable progress with it.
Benefits of Ethereum smart contract
- It eliminates intermediaries, so it offers its users total control and minimizes extra costs.
- It's recorded, encrypted, and duplicated on the public blockchain. Thus all users can observe the market activity.
- It eliminates the time and effort that manual processes require.
However, the code is translated in literal form. So any mistakes during its creation can lead to disastrous results that you can't change later.
Ethereum blockchain technical characteristics
The Ethereum platform runs on the PoW consensus protocol via the Ethash algorithm. Ethash is a very challenging algorithm and its main focus is GPU mining. It employs the Keccak hash feature, popularly recognized as SHA-3. Thus, this algorithm aims to implement high-security cryptographic components. Simultaneously, Ethash has intensive memory and cache usage, so it offers strength to ASIC mining while avoiding cache centralization.
Issuance of cryptocurrencies
Ethereum has a limited emission of 18 million Ethers yearly. This means that mining activity can produce a maximum of 18 million cryptocurrencies every year. Yet, the global issuance is infinite. To accomplish this amount of emission, the network relies on a fairly peculiar coinbase trading system.
Gas is a unique term for the Ethereum platform. It measures the work done across the blockchain. Each action in this network, such as a transaction or a group of transactions, has a particular charge that comes in gas units.
- It attributes a fee to the fulfillment of the tasks. Each action has a gas fee and a collection of actions performed adds up to the whole cost of that transaction. Therefore, we can see Gas as the charge for taking actions within the blockchain.
- It helps to improve the in-system security. Since each action has a price, this prevents the blockchain from stopping its operation and impairing its security. This is possible because Gas protects the network from spam attacks.
- Rewards miners. Shares in the Ethereum blockchain rely on its performance on hardware held by miners. To pay for this usage, there's Gas.