Bitcoin was first but what came next? Ethereum is the second to emerge and brought many new and exciting ideas. So what is Ethereum? Who created it? Why was it created? In this lesson, we’ll explore more!
What is Ethereum?
Ethereum is a blockchain that lets you perform transactions, similar to the Bitcoin blockchain. However, it also powers applications that anyone can create for everyone to use.
As a result, Ethereum can go beyond just being used for payments. It has evolved to become a marketplace for financial services, games, and other types of applications. All while providing the privacy and security of a blockchain.
The protocol itself is Ethereum while the currency that powers it is simply known as ether (or ETH).
Why Ethereum was Created
A few years after the Bitcoin whitepaper was published, a young programmer named Vitalik Buterin had ideas for how blockchain technology could grow beyond secure virtual payments. His concept was eventually published as Ethereum in 2014 and just a year later, the Ethereum platform was launched.
Ethereum is open to everyone and lets users deploy their own code and applications. It is designed to be scalable, programmable, secure, and decentralized. This means that developers and enterprises can create technology based on it. Other users can then interact with these applications and continue growing the space. Thanks to its flexibility, many different applications can be launched on Ethereum.
How Ethereum Works
With blockchain technology, all information in the network is distributed and validated by a network of automated programs. As a result, these programs can’t be tampered with by bad actors and ensure security. No changes can be made unless the network reaches a consensus.
The consensus mechanism Ethereum uses is called proof-of-work. This method works by having a network of participants run software that attempts to prove an encrypted number is valid. It is also referred to as mining. Once the first miner has proven the number, they are rewarded and a new block is opened on the blockchain.
Ethereum vs Bitcoin
If there is just one important thing to remember about the difference between these blockchains, it is that Ethereum is a programmable network with many applications while the Bitcoin blockchain can only support the bitcoin cryptocurrency.
With the Ethereum blockchain, developers can get their hands dirty and contribute to the growth of the crypto space. As you continue to learn more about the different technologies and services, you will see how much Ethereum has contributed to the development of products and services.
You should be able to answer all the questions below. If you are having trouble answering any of them, go back and review the lesson & the external content.
- Who is the programmer behind Ethereum’s conception?
- What is the difference between Ethereum and Ether?
- What is the main purpose of Ethereum?
- How does Ethereum use the proof-of-work mechanism?
- How is Ethereum different from Bitcoin?