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What Is Etherium? Its Role in Smart Contracts Revolution

Etherium is an open-source blockchain platform that facilitates peer-to-peer contracts, often referred to as smart contracts. The platform allows people to write smart contracts and build decentralized applications to perform an array of functions.

Ethereum came into being in 2013 as part of a white paper by Vitalik Buterin. In the whitepaper, the co-founder described a way of building decentralized applications on the blockchain, arguing that Bitcoin, which was popular at the time, needed a script language for app development.

The open-source platform is based on blockchain technology principles that allow developers to create operations based on their needs. Using the blockchain platform, developers can program smart contracts to exchange value on the network without requiring an intermediary.

The Etherium network acts as a decentralized computer for running a smart contract code. Its value lies in the fact that it can be used to write codes that can control money and build decentralized applications for performing various functions. All computers connected to the network must come to a consensus for the execution if a given smart contract.

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How Etherium Works

Etherium consists of a series of cryptographic and secure public records linked together. On the public ledger, any person can create a financial contract or smart contract that executes automatically per the set rules.

The blockchain network comes with a public ledger whereby all transactions and operations on the network are recorded. The ledger is public, transparent, and difficult to alter. Miners are responsible for verifying transactions on the decentralized application.

Whenever a transaction is processed and approved by all miners, a new block is added to the chain resulting in a much bigger Etherium Blockchain. While traditional software applications rely on central authorities to store data and perform operations, the Etherium software does not.

In order to support the Etherium network, developers need a cryptocurrency through which they are paid for services rendered on the network.

What is Ether?

Ether is simply the native cryptocurrency powering the Etherium blockchain. The cryptocurrency is used to pay for transaction fees as well as computational services rendered on the Etherium network. The cryptocurrency only comes into being on the validation of transactions in the decentralized platform in a process referred to as mining.

While Ether operates as a cryptocurrency, it is a fuel that powers apps on the decentralized blockchain platform. For instance, let’s consider an app on the Etherium network that allows people to do various things, i.e., write notes, tabulate financial transactions etc. To complete any transaction using the app, one would have to pat ways with some money in the form of Ether.

What Affects Ether Price

Ether is the second-largest cryptocurrency by market cap. Its price is influenced by a number of factors key among them being how effective the Etherium network is at enabling the development and execution of smart contracts.

The cryptocurrency is also susceptible to price fluctuations in response to media hype about the Etherium network. Regulatory developments in key markets also influence people’s sentiments on crypto, conversely influencing Ether price.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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