Last Updated:
March 21, 2022

What Is Ethereum?

What Is Ethereum?

What Is Ethereum?

Ethereum is generally referred to as the world computer. Here is what this implies – Starting with an explanation that is technology related, Ethereum is a predictable yet potentially limitless machine and a publicly available in a particular state and a simulated machine that makes the necessary modification.

Related Reading: What is Ethereum 2.0?

From another point of view, Ethereum is a distributed computing platform that executes smart contracts and, at the same time, is publicly available for everyone to use, i.e., open-source. It uses blockchain technology to harmonize and keep the changes in the system.

Developers can build powerful decentralized apps with capacities for economic functions using the Ethereum technology. Ethereum completely removes restrictions and eliminates counterparty risks while providing a high level of transparency and ease.

Compared to Bitcoin, which is known to have limitations in terms of its scripting language, Ethereum was created to be open source and a blockchain that can be tweaked yet running on a virtual machine that executes complex codes with different levels magnanimity.

Who Created Ethereum?

Vitalik Buterin - a young computer programmer passionate about bitcoin, started reminiscing on the possibilities of utilizing Bitcoin differently in 2013. In the same year, he did that of Bitcoin. He postulated a global approach protocol to MasterCoin (a protocol that extended Bitcoin to offer basic smart contracts), but this was not the exact model Ethereum used. His theory would become a replacement for MasterCoin's primary contract language. The MasterCoin team was pleased, but it was too much of a radical change to incorporate into their growth plans.

In December of that same year, he published a whitepaper outlining the concept behind how Ethereum works. It was a Turing-complete, all-purpose innovation in blockchain technology. A limited number of persons saw this content early and gave the necessary feedback, which he used to improve the idea.

Ethereum: An all-purpose Blockchain innovation

The most popular blockchain and the first to one available, Bitcoin, keep trail and ownership records of the units in circulation. We can note that Bitcoin is a currency in harmony even in its dispersion such that transactions carried out globally are uniform and change of ownership is recorded. Subsequently, several blocks have been mined, and the state transitions are controlled by the general reactions of people and systems. Thereby constituting the constraints, allowing all those mining to agree on a uniform system state.

Ethereum, on the other hand, is a spread-out state machine in its workings. It keeps track of the state conversions of an all-purpose data store, i.e., a store that will hold data expressible as a key-value tuple rather than currency possession.

Ethereum’s Workings and Concepts

In Ethereum, they are different parts that make up the whole system, and they are explained briefly in the following texts:

  • Peer-to-peer Network. (P2P)
  • The rule of harmony and uniformity applies.
  • The famous Yellow Paper, the Ethereum go-to guide for specification, defines the consensus rules.
  • The state of Ethereum is preserved locally on a node in the form of a database, which clutches the transactions and system state in a serialized hashed data structure known as a Merkle Patricia Tree.
  • Ethereum utilizes the Nakamoto all-purpose model, which uses sequential single-signature blocks that are subjective in importance to establish the longest chain and hence the current state. However, there are plans to transfer to a PoS weighted voting mechanism known as Casper in the future.
  • Ethereum now uses the Ethash PoW algorithm. However, this will be phased out when the network switches to PoS.