What is Ethereum and How does it work?

In 2009, when Bitcoin made an entry into the world, other people were busy finding out how Bitcoin and blockchain technology works, Vitalik Buterin, a Russian-Canadian programmer was thinking about other ways of adopting blockchain technology that would bring more benefits out of it. As a result, He with seven other developers founded Ethereum.

What is Ethereum and How does it work?

What is Ethereum?

Ethereum is a decentralized, open-source, and most actively used blockchain right now. It is not just a platform but also a programming language running on the blockchain helping developers to build and publish distributed applications and Smart Contracts.


The applications on Ethereum run using platform-specific cryptographic token ether, which could be referred to as a vehicle for moving around on the Ethereum platform and is mostly sought by developers looking to develop and run applications on Ethereum. Users have to pay ether in form of gas while performing tasks on ethereum blockchain. Ether is the second-largest cryptocurrency by market capitalization, after Bitcoin.

How does ethereum work?

Ethereum works as an open software platform functioning on blockchain technology. This blockchain is hosted on many computers around the world, making it decentralized. Each computer has a copy of the blockchain, and there has to be a widespread agreement before any changes can be implemented to the network.

The ethereum blockchain is similar to bitcoin’s in that it is a record of the transaction history. However, the ethereum network also allows developers to build and deploy decentralized applications known as DApps. These are also stored on the blockchain along with records of transactions.

The concept of EVM

In the Ethereum blockchain, there is a single, canonical computer called the Ethereum Virtual Machine (EVM). Every system that participates in the Ethereum network keeps a copy of the state of EVM. Additionally, any participant can broadcast a request for this computer to perform arbitrary computation. Whenever such a request is broadcast, other participants on the network verify, validate, and carry out the computation. This results in a state change in the EVM, which is committed and propagated throughout the entire network.

All the requests for computation are called transaction requests. The record of all transactions and EVM’s present state is stored in the blockchain.

Whenever the transaction takes place, cryptographic mechanisms ensure if it is valid and after verifying it is added to the blockchain. The mechanisms also ensure that all transactions are signed and executed with appropriate identity.

In short, Ethereum is an open and decentralized network that allows anyone who wants to participate through decentralized projects and they have to pay ether for gas. Ethereum is the epitome of the fact that services can run without any intermediate, or security aspect, avoiding business fraud through blockchain technology.