Ether

Ethereum (ETH) is an open source blockchain-based software platform that can be used for sending and receiving value globally with its native cryptocurrency, ether, which provides utility to the network.

The Ethereum blockchain facilitates the execution of smart contracts which are self-executing contracts with the terms of the agreement directly inscribed into the code. The advent of smart contracts has also led to the creation of decentralized autonomous organizations (DAOs) and an entire decentralized finance ecosystem, or “DeFi.” ETH is among the most popular cryptocurrencies and currently ranks just second to Bitcoin.

First proposed in 2013 by computer programmer Vitalik Buterin, Ethereum was designed to expand the utility of cryptocurrencies by allowing developers to create their own special applications. Unlike traditional apps, these Ethereum-based decentralized applications (DApps) are self-executing thanks to the use of smart contracts. Smart contracts are code-based programs that are stored on the Ethereum blockchain and automatically carry out certain functions when predetermined conditions are met. In November 2013, Buterin released the Ethereum white paper and a month later, Buterin asked Amir Chetrit to join his project. In January 2014, Buterin attended the Bitcoin Miami conference, where he met the people who would form the original Ethereum Foundation.

In August 2014 Ethereum launched ether through an initial coin offering. The Ethereum Public Blockchain was launched on July 30, 2015 in a collaborative effort led by Vitalik Buterin.

Scalability

On September 15, 2022, Ethereum transitioned its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS) in an upgrade process known as "the Merge,” where validators would do work based on the quantity of ETH they possessed and what they wanted to "stake" as collateral. Under the proof-of-stake mechanism, validators must stake at least 32 ETH to participate in the block validation process and secure the Ethereum network. The more ETH a validator stakes, the higher the probability of them being chosen to propose a new block of data transactions for confirmation on the blockchain. The protocol randomly selects a validator to propose a new block, and the selected validator's proposed block is then checked by other validators. If the majority of validators agree on the validity of the new block, it is added to the blockchain. Validators are incentivized to act honestly and maintain the network's integrity because they risk losing a portion, or even all, of their staked ETH if they try to validate fraudulent transactions or otherwise act maliciously. In return for staking their ETH and participating in the validation process, validators are rewarded with additional ETH. Not everyone has the necessary amount of ETH to stake, and not everyone wants to run their own validating node due to technical requirements. For these reasons, staking pools and services have emerged, allowing users to pool their ETH together to reach the staking minimum and share in the returns.

Governance

The reductions in block rewards aren’t programmed into Ethereum’s code like Bitcoin’s halving events are. Instead, members of the community propose changes, called “Ethereum Improvement Proposals,” or EIPs, and the rest of the community votes on whether to include the proposals in updates to Ethereum’s software code. Here is a breakdown of ether’s issuance schedule to date.

Usage

The Ethereum Public Blockchain often serves as a proving ground for innovative protocols. The network allows for direct transfers between accounts via a decentralized infrastructure, where participants retain custody of their digital assets without third-party control or intervention.Ethereum token standards are the blueprints for creating tokens that are compatible with the broader Ethereum network. These include tokens that can be traded for one another (fungible) as well as tokens that are inherently unique and cannot be mutually exchanged (NFTs). Ethereum token standards were invented by Ethereum developers to help users create new digital currencies more easily, faster and cheaper than starting from scratch.While there are several different token standards known as “ERC” deployed on the ethereum network, three are commonly used:

• ERC-20: For creating fungible tokens that have similar properties to bitcoin and other mainstream cryptocurrencies.
• ERC-721: For creating non-fungible, unique tokens such as NFTs.
• ERC-1155: A multi-token standard used for creating fungible, non-fungible and semi-fungible tokens.