Ethereum Network Explained

• Ethereum is community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralized applications.

How Ethereum Describes Itself

• A fairer financial system
• The internet of Assets
• An open Internet
• A new frontier for development

Ethereum Definition

• A decentralized blockchain network powered by the Ether token
• It enables users to make transactions
• It enables users to earn interest on their holdings through staking
• It enables users to use and store non-fungible tokens (NFTs)
• It allows users to trade cryptocurrencies
• It allows users to play games and use social media

Ethereum's System

• Ethereum is essentially a single decentralized system that runs a computer called the Ethereum Virtual Machine (EVM).
• Each node holds a copy of that computer.
• Any interactions must be verified so everyone can update their copy.

Ethereum Components

• Smart Contracts: automatically executes when certain parameters are met.
• Dapps: Use apps on the Ethereum network like the App Store.
• Validators: Confirm all on-chain transactions to allow the Ethereum network to function.

History of Ethereum

• Vitalik Buterin is a Candian computer programmer and co-founder
• Buterin co-founded Bitcoin Magazine in 2011
• In 2015, Buterin deployed the Ethereum blockchain with Gavin Wood, Charles Hoskinson, Anthony Di Iorio, and Joseph Lubin.
• Ethereum is a "decentralized mining network and software development platform rolled into one."

Ethereum's Significance

• Ethereum is considered the internet's next step.
• If centralized platforms like Apple's App Store represent Web 2.0, then Ethereum is Web 3.0.
• Ethereum supports decentralized applications (DApps), decentralized finance (DeFi), and decentralized exchanges (DEXs).

How Ethereum works

• Each transaction comes with a fee called “gas,” which is paid by the user initiating a transaction.
• That fee is paid to the node as an incentive for validating transactions and ensuring network security.
• Gas essentially serves as a limit, restricting the number of actions a user can make per transaction and also prevent network spam.
• Ether is the currency of the network.
• Ether is the “fuel” of the Ethereum network.
• Its utility value as a crypto-fuel is referred to as “gas”.
• The sender of requests is required to pay for the computing resources consumed in Compensation.

The Cost of fulfilling a request requires the following formula

• Cost = (Volume + Complexity) X Current Gas Price

What Ethereum Does

• DeFi: biggest achievement and platform
• The DApps increase the Ethereum network use and bring more awareness to the platform
• NFTs hold proof of ownership and secure form of storage
• Social media apps that are uncensorable and enable users to tip each other for content.
• Games enable users to invest in assets, play to grow them, and then sell for a profit, extracting actual value from their game time
• Prediction platforms: Reward correct forecasts
• Freelance platforms dont take a huge cut from each payment

Etherum Advantages

• Lack of Censorship: Censorship can only happen on the Ethereum-based social media platform if the community votes to do it. Users can discuss different viewpoints.
• Community Security: Bad actors would need to control 51% of the network to make a change.
• Smart Contracts: Automate many of the steps taken by central authorities on the traditional web.

Etherum Disadvantages

• Scalability: Features high transaction fees
• Decentralization hinders transaction speed. An entity, like Visa, manages everything and has perfected the transaction process
• Accessibility: The platform is expensive to develop and challenging to interact with for users unfamiliar with its technology; and requires specific wallets.
• Usability needs streamlining

Bitcoin vs. Ethereum

• Both considered leaders of their respective domains

Bitcoin AND Ethereum

• Most widely recognized cryptocurrencies today and most valuable in terms of total market capitalization.
• Digital assets stored in digital wallets & both decentralized
• Sold on cryptocurrency exchanges, and based on a publicly visible distributed ledger (blockchain).
• Etherium uses smart contracts and can run applications

Bitcoin vs Etherium Contunued

• Currency and Platform: Ethereum is a platform to run applications and smart contracts
• Consensus Mechanism: POW vs POS
• Transaction Capacity: 7-10/second vs 100k/second (intended)
• Block Time: 10 minutes vs. 10-20 seconds
• BTC is the most mainstream cryptocurrency.
• Ethereum strives to be the next phase in the evolution of the Internet.
• Automates processes that require intemediaries like app stores and working with fund managers
• All Ethereum-based tokens are technically interoperable, and Bitcoin's network is only for Bitcoin.

What Ether (ETH) Is:

• Ethereum is the blockchain, and ether is the Ethereum's built-in cryptocurrency.
• ETH is the primary asset.
• ETH powers Ethereum and fuels and secures Ethereum.
• When use an Ethereum application a fee is paid using ETH to use the network.

Gwei Definition

• Gwei is the denomination of ether most widely used and the most used unit.
• 1 ETH = 1 billion Gwei
• (1 ETH = 1018 Wei)
• Gwei is used to pay for the computational power.
• The standard transaction fee is 21,000 gwei
• Transaction fees increase proportionately to the underlying complexity of the transaction.

Buying ETH Guidelines

• Choose a cryptocurrency exchange
• Fund your account
• Place an order
• Store your Ethereum

Essential Ethereum Terms

• Smart Contracts: Agreements that turn the terms of an agreement into computer code that's automatically executed when the contract terms are
• Dapps: A smart contract and a web user interface; and a web application built on top of open, decentralized, peer-to-peer infrastructure services.
• Ethereum Virtual Machine (EVM): Enables anyone to run any program, given enough time and memory, regardless of the programming language
• Tokens: Tradable virtual goods defined in smart contracts on the Ethereum blockchain can be tracked, traded, and are interchangeable unlike NFTs.
• NFT: Also knows as a deed, is a token standard introduced by the ERC-721 proposal. NFTs can be tracked and traded, but each token is unique and distinct.
• ERC-20: Allows developers to build token applications that are interoperable with other products and services
• Decentralized Autonomous Organizations: Operates without hirearchical management
• Gas: A virtual fuel used in Ethereum to execute smart contracts
• Wallets: Software that holds private keys to access and control Ethereum accounts. Its keys don't need to be stored in a wallet, and instead be retrieved offline for improved security.
• Oracles: A bridge between chain and the real world to get asked for and be used for smart contracts
• DEX: A type of dApp in Ethereum and swap tokens. Ether is needed for fees.

Use Case Examples

• Banking and finance: Faster cross border transaction processing, higher level of security and privacy, reduce costing, and greater efficiency
• Real estate: Reduces property ownership costing, promotes fractional ownership/ increases scalability
• Healthcare: Gets rid of drug counterfeits, tracks patient information, streamlines test results
• Media and entertainment: Better artist value connecting them with better paychecks
• Supply chain: Secure lager visibility to track products by detecting corrupted personal information quickly
• Government: A secure way to preserve all citizen rights for economic growth that offers document-less citizenship and portable identification, which reduces theft/hacks
• Insurance: Reduces the number of paper trails for faster claims with no more consumer exploitation

Explore the key functions of the Ethereum network. Learn about validators, transaction fees (gas), and the Ethereum Virtual Machine (EVM). Understand the role of Ether and smart contracts in this decentralized platform.