Beginner’s Guide to Ethereum

What is Ethereum?

• Ethereum is a software platform that aims to act as a decentralised Internet as well as a decentralised app store (like a smart phone where apps can be built on).

  • What does decentralised mean? - This means it can’t be controlled by a single governing entity. Every single interaction happens between and is supported only by the users taking part in it, with no controlling authority being involved.

  • Ethereum’s platform enables users to create decentralised apps – the apps can either be entirely new ideas or decentralized reworks of already existing concepts.

  • Ethereum allows you to trade nonfungible tokens (NFTs), trade cryptocurrencies, play games, use social media and much more.

What is Ethereum?

• In essence, Ethereum is a blockchain that acts as a decentralised internet and app store (like a smart phone where apps can be created).

Exactly what does the term "decentralised" mean?

• This means that no single governing entity can control it. There is no controlling authority involved in any interaction. Each interaction happens between and is supported only by the participants.

  • In Ethereum, users can create decentralised apps - either entirely new concepts or decentralized reworks of existing ones.

  • The Ethereum platform allows you to trade nonfungible tokens (NFTs), trade cryptocurrencies, play games, and use social media.

• Ethereum is widely believed to be the next stage in the internet.

  • Ethereum is comparable to Web 3.0 if Apple's App Store is an example of Web 2.0.

• Decentralized applications (DApps), decentralized financial services (DeFi), and decentralized exchanges (DEXs) are all supported by this "next-generation web."

Who came up with Ethereum?

• Vitalik Buterin was 19 when he came up with the idea for Ethereum in 2013. When he launched Ethereum in 2015, he was 21 years old.

• Seven additional founders assisted Vitalik in developing Ethereum.

How are brand-new Ethereum tokens produced?

• Up until recently, new Ethereum tokens were mined using "Proof-of-Work" in a manner similar to that of Bitcoin.

  • The computers that run the software and process transactions to create blocks are known as Ethereum miners, and they are rewarded with new Ethereum.

• Ethereum switched from "Proof-of-Work" to "Proof-of-Stake" because "Proof-of-Work" uses a lot of energy and causes high fees on the network.

  • As a result, Ethereum 2.0 introduced "Proof-of-Stake" to assist in lowering fees and achieving an eco-friendlier strategy.

What makes Ethereum valuable?

• Since Ethereum's platform lets you run "smart contracts," it's a second-generation cryptocurrency (Bitcoin is a first-generation one).

  • This means that Ethereum doesn't just track transactions; it also programs them; designed to perform specific network transactions and other actions with parties you don't necessarily trust automatically.

  • This eliminates the need to go through a lawyer or other intermediary when exchanging money, property, or stock.

• Users can take part in DeFi, also known as decentralized finance, thanks to smart contracts.

  • DeFi not only serves as a means of creatively unlocking value for payments, loans, insurance, and other purposes, but it also enables users to trade assets and lend and borrow directly from one another without the need for banks.

  • Similar to a savings account, you can earn yield using Ethereum without a middleman. As a result, you can earn lucrative rewards that may assist in mitigating inflation.

  • With bank savings accounts, you annually lose purchasing power at today's inflation rates.

• In just six years, the DeFi value of Ethereum surpassed $100 billion.

  • Retail customers are likely to shift their attention to the DeFi market as a result of its accessibility and favourable interest rates. DeFi holds assets worth more than $65 billion as of right now.

• The value of Ethereum can be summarized as its platform utility.

  • Ethereum's value is derived from its role as "digital oil," in contrast to Bitcoin's value, which derives from its role as a store of value.

  • This is due to the fact that Ethereum is required to operate applications in the digital world, whereas oil powers so many physical applications.