Ethereum (ETH) is an open-source, decentralized blockchain network that represents the second generation of blockchain technology, building upon the foundational principles of Bitcoin. While sharing some similarities with Bitcoin, Ethereum introduces significant improvements and unique functionalities. It enables digital payments using its native cryptocurrency Ether (ETH) and serves as a software platform for creating and deploying decentralized applications (DApps) and smart contracts.
As of the current ETH price, Ethereum ranks as the second-largest cryptocurrency by market capitalization, trailing only Bitcoin. By introducing smart contract capabilities, Ethereum has revolutionized the digital currency industry, unlocking unprecedented possibilities for users and developers.
How Ethereum Operates
Consensus Mechanisms
Initially launched in 2015, Ethereum adopted a Proof-of-Work (PoW) consensus model, similar to Bitcoin. In this system:
- Miners compete to solve complex equations using high-performance hardware.
- The first miner to solve the equation earns the right to produce a new block and receives newly minted ETH as a reward.
However, Ethereum is transitioning to a Proof-of-Stake (PoS) model through its Ethereum 2.0 upgrade. This shift eliminates energy-intensive mining and replaces it with a staking mechanism where validators lock up ETH to secure the network.
Account Architecture
Ethereum employs an account-based structure with two types:
- Externally Owned Accounts (EOAs): Controlled by users via private keys.
- Contract Accounts: Managed by smart contract code.
Both account types can hold, send, and receive ETH and interact with smart contracts.
Ethereum Virtual Machine (EVM)
The EVM is the core of Ethereum, functioning as a distributed global computer. It executes smart contracts and maintains the network’s state, ensuring security and decentralization.
The Ethereum Merge
The Ethereum Merge marks a pivotal upgrade transitioning Ethereum from PoW to PoS. Key phases include:
- Phase 0 (Beacon Chain): Launched in December 2020, introducing PoS staking.
- Phase 1 (The Merge): Completed in 2022, merging the Beacon Chain with the mainnet.
- Phase 2 (Sharding): Expected in 2023–2024, enhancing scalability by splitting the network into 64 shard chains.
👉 Learn more about Ethereum’s upgrades
ETH Price & Tokenomics
Initial Distribution
- 2014 ICO: 60 million ETH sold at ~$0.31 per ETH.
- Genesis Supply: 72 million ETH (16.73% allocated to the Ethereum Foundation).
Current Supply
- Circulating Supply: ~122 million ETH.
- Inflation Rate: Block rewards have decreased from 5 ETH/block (2015) to 2 ETH/block post-London hard fork (EIP-1559).
Founding Team
Ethereum was co-founded by Vitalik Buterin and seven others, including:
- Gavin Wood: Created Solidity (Ethereum’s programming language) and later founded Polkadot.
- Charles Hoskinson: Left Ethereum to develop Cardano.
FAQs
What is Ethereum’s primary use case?
Ethereum enables smart contracts and DApps, powering industries like DeFi, NFTs, and blockchain gaming.
How does PoS improve Ethereum?
PoS reduces energy consumption by 99% and enhances scalability through sharding.
Where can I buy ETH?
ETH is available on major exchanges like 👉 OKX.
Ethereum’s continuous evolution and widespread adoption solidify its position as a cornerstone of blockchain innovation. With its robust ecosystem and upcoming upgrades, ETH remains a pivotal asset in the crypto landscape.