What is Ethereum?

For Beginners

What is Ethereum?

Ethereum is a crypto project released in 2015. It’s the second-biggest such solution in the world, behind only Bitcoin. Its biggest attraction point is its use of smart contracts – highly modifiable solutions that allow developers of decentralized apps to automate large portions of the regular transactions processes with contracts.

There’s more to it, naturally, but that’s why smart contracts were and still are the biggest selling point. Not only are they beneficial for developers, but they are also incredible for reducing transaction costs and processing speeds. That’s basically everything an individual user would want.

What are Smart Contracts?

What is a smart contract on Ethereum? In short, they are agreements between whoever issued the contract and any potential signers of that contract. It’s not a binding agreement in the usual sense. It doesn’t necessarily involve any exchange of property. It’s simply a piece of algorithm with a list of requirements. If met, it’s supposed to perform some prewritten action.

It can be anything from the actual exchange of property to processes inside the app or simple transactions. The fuel of these contracts is, naturally, ETH, but it doesn’t necessarily imply the movement of money. This versatility creates limitless potential for developers and great convenience for regular users.

How does Ethereum Work?

So, what is the Ethereum blockchain like? Ethereum is starkly different from Bitcoin, in large part thanks to the integral use of smart contracts. Where Bitcoin acts as a transparent, secure, and reputable ledger of transactions, Ethereum automates a lot of the processes. Many things on Bitcoin are manual, which was improved on Ethereum.

Smart contracts on Ethereum can be incredibly multilayered. A simple click of a button can be a catalyst for a whole series of algorithms, which improves scalability a lot. For this reason, Ethereum is also outstanding as a financial tool. It basically gave birth to the decentralized finance (DeFi) that millions use nowadays.

All of that is powered by ETH. Tiny amounts of ETH called ‘gas’, are required to process these contracts. However, since it’s a lot quicker to do with smart contracts, the fees are a lot lower on Ethereum blockchain than on the Bitcoin blockchain. That’s what a lot of users wanted from crypto even back then.

Is Ethereum Secure?

What is Ethereum’s code in terms of security? Ethereum is different from Bitcoin, but it doesn’t necessarily mean that it went in a completely opposite direction. It’s still a secure and transparent network, where all transactions are recorded on the blockchain and displayed for everyone to see. Except now you look at smart contracts to check if everything went according to plan.

It’s incredibly secure like blockchains usually are. The same automated algorithms verify and process every transaction, which increases the security of ETH compared to the networks that don’t use smart contracts. It doesn’t, however, necessarily mean that all ETH apps are just as secure. They are as secure as their developers let them be.

Ethereum 2.0

Another important aspect to note in terms of Ethereum development is the currently ongoing process called ‘Ethereum 2.0’. As of June 2023, it hasn’t been fully implemented, but it is actively in the process of doing that. What is Ethereum 2.0, and why should you care?

Ethereum 2.0, also known as Eth2 or Serenity, is a major upgrade to the Ethereum blockchain that aims to address scalability, security, and sustainability challenges. This upgrade represents a significant milestone in the evolution of the Ethereum network and holds the potential to revolutionize the world of smart contracts.

The main goal of Ethereum 2.0 is to transition the Ethereum network from its current proof-of-work (PoW) consensus mechanism to a more efficient and environmentally friendly proof-of-stake (PoS) consensus mechanism. It’ll basically have more scalability for Ethereum, but everyone should agree to it before it can happen.

ETH on CoinDepo

The CoinDepo platform supports Ether (ETH) as one of the main cryptocurrencies. With CoinDepo, you can safely store your ETH in Compound Interest Accounts and earn from 12% to 18% per annum + compound interest, depending on the type of interest account you choose. Today, without exaggeration, this is the best offer on the market. 

You can also borrow other major cryptocurrencies and stablecoins from CoinDepo against your ETH portfolio without opening a collateral account, which is a unique service that has no analogs in the world of digital assets.

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