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Ethereum: The infrastructure for the decentralized web.
In the world of blockchain, Ethereum is considered more than just a digital currency. It is a comprehensive ecosystem aimed at building a decentralized network capable of supporting smart applications (DApps), smart contracts, and decentralized finance (DeFi) platforms.
1. Origin and Technical Structure
Ethereum was launched in 2015 by Vitalik Buterin, to be the second generation of blockchain technology, after Bitcoin. The fundamental difference between the two is that Ethereum is not just a means of payment, but a decentralized global computer that people can program applications on.
Ethereum operates on a virtual machine known as EVM (Ethereum Virtual Machine), which is a runtime environment that enables developers to execute smart contracts in a language called Solidity. Each smart contract is stored and executed on the blockchain, making it transparent, tamper-resistant, and unstoppable.
2. Consensus Mechanism
In its early days, Ethereum used a Proof of Work (PoW) mechanism, like Bitcoin. But in September 2022, it successfully transitioned to a Proof of Stake (PoS) mechanism through an update known as The Merge, reducing energy consumption by over 99%.
Now, the network is secured through Staking: meaning that users can lock 32 ETH in a smart contract to become "validators" participating in block verification.
3. Scalability and Future Updates
Ethereum faced challenges in speed and costs, especially during peak times. For this reason, off-chain solutions have been developed such as:
Rollups (Optimistic & ZK): Aggregates hundreds of transactions into a single process that is validated later.
Sharding: Dividing the network into parts (shards) to process transactions in parallel.
Sharding is expected to be implemented in upcoming updates within the long roadmap of Ethereum, which includes phases like Surge, Scourge, Verge, Purge, Splurge.
4. The Ecosystem and Applications
Ethereum is considered the backbone of several emerging sectors:
DeFi: Platforms like Uniswap, Aave, MakerDAO.
NFTs: The OpenSea marketplace relies on Ethereum.
DAOs: Decentralized organizations fully managed through smart contracts.
This expansion has made ETH not just a digital asset, but also fuel (gas) to run a whole network of applications.
5. Challenges and Risks
Despite its strengths, Ethereum is not without challenges:
High fees (gas fees).
Security threats to smart contracts.
Competition from other networks like Solana, Avalanche, and Polkadot.
