$ETH Ethereum is a decentralized, open-source blockchain system that enables the creation and execution of smart contracts—self-executing agreements written in code. Launched in 2015 by Vitalik Buterin and a group of co-founders, Ethereum aimed to expand the capabilities of blockchain technology beyond simple financial transactions, as seen with Bitcoin. Its native cryptocurrency, Ether (ETH), is used to pay for transactions and computational services on the network.

What makes Ethereum especially powerful is its ability to host decentralized applications (dApps). These applications operate without a central authority, running exactly as programmed, which has opened up entire sectors like decentralized finance (DeFi), non-fungible tokens , and decentralized autonomous organizations (DAOs). Ethereum's versatility has made it a foundational layer for much of the Web3 ecosystem.

Ethereum originally used a proof-of-work (PoW) consensus mechanism, but in 2022 it transitioned to proof-of-stake (PoS) with the Ethereum 2.0 upgrade, known as "The Merge." This significantly reduced the network’s energy consumption and improved scalability. Stakers now validate transactions and secure the network in exchange for ETH rewards.

Despite competition from other smart contract platforms like Solana and Cardano, Ethereum remains the most widely used and supported blockchain for dApp development. Challenges such as high gas fees and network congestion are being addressed through solutions like layer-2 scaling (e.g., Optimism, Arbitrum) and ongoing protocol upgrades.

ETH also acts as a store of value and a speculative investment, often dubbed "digital oil" because it fuels operations on the Ethereum network. As blockchain adoption grows, Ethereum is positioned to be a core infrastructure layer of the future internet.

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