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Ethereumis a platform that enables developers to create decentralized applications, or dapps. It also supports the creation of smart contracts, which are computer protocols that emulate the logic of contractual clauses and automate flows of value.
Unlike centralized services like banks, the Ethereum network is open to everyone around the world. This means you can use it to coordinate, make agreements or transfer digital assets – all without intermediaries. And because the network is based on the blockchain, it’s nearly impossible for anyone to tamper with its data or take control of your assets.
The Future of Finance: Exploring Ethereum’s Impact on DeFi
The core of Ethereum is its blockchain-based ledger. The blockchain is a publicly accessible, cryptographically secure and highly transparent record of all transactions. It includes the ethereum wallet balances of all participants, their associated transaction history and the code that runs each dapp or smart contract. The blockchain is constantly being updated with new information.
In order to validate and verify the information that gets added to the blockchain, nodes in the Ethereum network compete against each other using energy-intensive computers in a process known as mining. These miners are rewarded with the Ethereum cryptocurrency ether for their efforts, which is then traded on cryptocurrency exchanges for cash.
A significant upgrade to Ethereum was released in 2022 called Merge which split the network into two chains, or “shards,” that perform a different set of functions. The shard chain structure is intended to reduce the computational resource needed to verify the global state of the network and allow for higher transaction speeds and better security by minimizing potential attack surface.