Ethereum is a decentralized blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bitcoin in market capitalization. It is open-source software.
Ethereum was conceived in 2013 by programmer Vitalik Buterin. Other founders include Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin. In 2014, development work began and was crowdfunded, and the network went live on 30 July 2015.
Ethereum allows anyone to deploy permanent and immutable decentralized applications onto it, with which users can interact. Decentralized finance (DeFi) applications provide financial instruments that do not directly rely on financial intermediaries like brokerages, exchanges, or banks.
This facilitates borrowing against cryptocurrency holdings or lending them out for interest. Ethereum also allows users to create and exchange non-fungible tokens (NFTs), which are tokens that can be tied to unique digital assets, such as images.
Additionally, many other cryptocurrencies utilize the ERC-20 token standard on top of the Ethereum blockchain and have utilized the platform for initial coin offerings.
On 15 September 2022, Ethereum transitioned its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS) in an upgrade process known as “the Merge”. This has cut Ethereum’s energy usage by 99%.
Ethereum’s Accounts
There are two types of accounts on Ethereum: user accounts, and contract accounts. Both types have an ETH balance, may transfer ETH to any account, may execute the code of another contract, or create a new contract, and are identified on the blockchain and in the state by an account address.
Contracts are the only type of account that has associated bytecode and storage. The code of a contract is evaluated when a transaction is sent to it.
The code of the contract may read user-specified data from the transaction, and may have a return value.
In addition to control flow statements, the bytecode may include instructions to send ETH, read from and write to the contract’s storage, create temporary storage (memory) that vanishes at the end of code evaluation, perform arithmetic and hashing operations, send transaction-like calls to other contracts (thus executing their code), create new contracts, and query information about the current transaction or the blockchain.
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