What is Ethereum?
Ethereum (ETH) is a blockchain that allows remote programs (DApps) and smart contracts to run. Ethereum is the alternative to the established client-server architecture. In order to be able to make payments within the system, the ether token must be used.
All payments are checked and verified by nodes within the network. In addition, Ethereum is currently the second largest cryptocurrency behind Bitcoin.
How does Ethereum differ from Bitcoin?
Ethereum must be distinguished from Bitcoin as it is not a traditional token, but a platform with its own token. The platform is mainly used to emulate DApps and Smart Contracts. The smart contracts are seen as the biggest advantage of the system and can be subdivided into e-voting programs, virtual organizations, crowdfunding and identity management systems.
In addition, the use of a central server is dispensed with and a peer-to-peer network is used instead. Here all participants of the P2P network use the same database – the blockchain. In order to successfully act as a node in the ETH network, ETH clients are required first. These synchronize with the entire network and download all completed transactions.
Then the mining can be started within the network.
How are the tokens stored?
To store the tokens, a wallet is required, which is compatible with the token. By using the proof-of-work algorithm, new tokens are currently being mined. In the future, this will be replaced by a proof-of-stakes algorithm.
When mining the token, an arithmetic operation has to be performed which allows the hashing of new blocks. After the successful completion of a block, users receive a reward in the form of ether tokens.
Alexander Weipprecht is the managing partner of Provimedia GmbH. As a trained IT specialist for application development, he has been advising leading companies on the following topics for more than 10 years: online marketing, SEO and software. Cryptocurrency is becoming increasingly important to businesses and investors. Through Coin Report and Krypto Magazin Germany, Alexander wants to give all people easy access to the subject matter.