Ethereum

What is Ethereum?

Ethereum is widely recognized as the first blockchain platform to introduce and popularize the concept of general-purpose smart contracts. This innovation has allowed it to become a leading platform for decentralized applications (dApps).

Background

Ethereum was launched in 2014 by a team of co-founders including Vitalik Buterin, Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. The project’s genesis is often humorously linked to Vitalik Buterin’s frustration with a nerf to his character in the game World of Warcraft, which led him to conceptualize a platform with immutable and decentralized features.

How Does It Work

Ethereum’s operational framework includes several key aspects:

Proof of Stake (PoS) Blockchain: Ethereum has transitioned to become the largest PoS blockchain ecosystem, marking a significant shift from its original Proof of Work (PoW) mechanism.
Market Position: Its native cryptocurrency, Ether ($ETH), holds the position of the second-largest cryptocurrency by market capitalization, following Bitcoin.
Scaling Solutions: The platform is pursuing a rollup-centric approach for scaling, where user activities are offloaded to Layer 2 solutions (rollups) that operate on top of the Ethereum mainnet while leveraging its robust security measures.

Key Takeaways

Ethereum is the preeminent smart contract blockchain, leading in Total Value Locked (TVL), the number of applications, and overall user activity.
The platform has faced challenges with network congestion and high transaction fees, especially during periods of heavy use, prompting the development of Layer 2 and rollup scaling solutions.
Ether ($ETH), the native token of Ethereum, is primarily used as a “gas” token to compensate for computational resources and transaction costs on the network.

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