How does Ethereum enable smart contracts:
What is Ethereum (ETH)?
Ethereum (ETH) is a platform equipped with smart contracts that can automatically execute contract details without human intervention and blockchain technology that prevents tampering with contract details .
There is also a unique crypto asset available within the platform, sometimes called Ether (ETH). Ether (ETH) has the second largest market capitalization (as of April 1, 2022) after Bitcoin (BTC), and is used for remittances, settlements, and investments.
Ethereum (ETH), which is being developed as an open source, Build a token bridge has high expectations from various industries because it can automate the contract process and shorten the transaction period.
How to use Ethereum (ETH)
Ethereum (ETH) is primarily used to develop applications on the platform .
Applications developed using smart contracts and blockchain technology are called “DApps” and are being put to practical use in various genres such as finance, real estate, and games.
in addition, blockchain-based crypto assets are also used for speedy remittance and settlement, spot trading, leverage trading, etc.
How Ethereum (ETH) Works:
To understand how Ethereum (ETH) works, there are three main things you need to know:
② DApps (Decentralized Applications)
③ Mining method (PoW)
Among the above, smart contracts, which can automatically execute contracts on the blockchain, have become an essential mechanism for Ethereum (ETH).
We will discuss these three mechanisms in more detail.
smart contract
Simply put, a smart contract is a program that automatically performs a predetermined action when the user takes a certain action .
For example, when a user pays 1ETH, you can program to automatically get specific data.
Since the appropriate service can be provided according to the amount of ETH paid, there is no need to worry that the service was not provided even though the fee was paid.
In addition to payments, smart contracts can also be used to automatically execute contract procedures at financial companies and real estate companies.
The big difference from normal apps is that the transaction data recorded by blockchain technology is encrypted and managed in a distributed manner .
In addition, normal apps stop working due to bugs or maintenance when updating, but DApps can always keep running.
In DApps, all past operation logs are also recorded on the blockchain and can be viewed by all users. In other words, since all users can inspect the code, fraud and tampering are said to be extremely difficult.
DApps regular app
Code management Managed by all users Managed by developers
Agreement to trade agreement between users central administrator
App up and running always on There are times when it is not possible to operate
Mining method (PoW)
Mining is a mechanism that rewards crypto assets (virtual currency) to those who record and approve transaction data of crypto assets (virtual currency).
The mining method of Ethereum (ETH) uses a method called PoW (Proof of Work).
PoW is a mechanism in which when a cryptocurrency transaction occurs, calculation processing is performed using a computer or the like, and a reward is given to the person who has processed it the fastest. In other words, the higher the computer specs, the more advantageous mining can be.
However, if ordinary people try to make a large profit from mining, a huge cost will be incurred just by arranging server equipment.
There is a possibility that the mining method will change in the future, so there is no need to force yourself to participate in mining.
Compare the features of Ethereum (ETH) and Bitcoin (BTC)
Among the thousands of crypto assets, the second largest market capitalization is Ethereum (ETH) and the first is Bitcoin (BTC).
Comparing Ethereum (ETH) to Bitcoin (BTC), we see the following different characteristics:
Compare the characteristics of ETH and BTC
For those who are using Ethereum (ETH) for the first time, we will explain the features in more detail.
Send money faster than BTC
For crypto assets such as Ethereum (ETH), remittance is completed after approval of the contents at the time of transaction.