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What is Ethereum Blockchain? Function, Utilities & More

Introduction

The release of Bitcoin marked Blockchain’s revolution, but there are a few latecomers in the domain, such as Ethereum, who have got the same amount of traction, in fact, more. Initially released in 2015, Ethereum Blockchain is an open-source, blockchain-based, decentralized platform. Since its initial release, Ethereum has achieved several milestones. One of the recent big achievements of the platform is the partnership between Microsoft and ConsenSys. The partnership brings Ethereum Blockchain as a Service (EBaaS) to businesses and developers on Microsoft Azure.

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How is Ethereum Blockchain Different from Bitcoin?

Despite being similar to Bitcoin at its core, Ethereum has way more flexibility and applications to offer. Bitcoin or cryptocurrency transactions is just one of the many applications of Blockchain technology. This is where Ethereum Blockchain surpasses Bitcoin. Ethereum has a different objective than just allowing cryptocurrency transactions. Apart from digital cryptocurrency transactions, Ethereum also allows creating smart contracts and decentralized applications (DApps), the network’s two USPs.

Instead of using Bitcoin, Ethereum has its digital currencies, Ether and Gas, that fund the platform’s maintenance and all its applications. Another key difference between the two Blockchain networks is that Bitcoin is limited to 21,000,000 digital coins, whereas Ethereum has no limit on its numbers.

Read: How to make Career in Blockchain 

How Does the Ethereum Network Work?

Ethereum network works similarly to any other Blockchain network. Every new transaction is recorded and then examined by different nodes known as miners. These miners execute the program code on their computer to update the transaction in the decentralized ledger. Miners are awarded 3 Ether for every code they execute or every transaction they add to the chain. The result of each miner’s code is added to the consensus, which is then examined to authenticate the last transaction for smooth transactions throughout the network.

What are the Utilities of Ethereum Blockchain?

Ethereum Blockchain has many applications to offer apart from cryptocurrency transactions, some of them are:

1. Smart Contracts

Smart contracts in Blockchain are a collection of programmed codes and protocols that automatically enforces certain agreements made in the contracts. The codes of smart contracts function as the rules that all the parties involved have to abide by. When a single or all the conditions are met, the contract automatically triggers the following action set and agreed upon by the developers. These contracts possess all Blockchain technology characteristics, including security, trust, autonomy, and efficiency. 

While almost every Blockchain network allows creating smart contracts, they are very limited in terms of flexibility. Ethereum allows businesses to create nearly any number of smart contracts they want. Smart contracts on the Ethereum Blockchain platform are fueled by gas. Whenever a smart contract is executed on the platform, a small amount of gas is transferred to the miners.

Ethereum Blockchain’s smart contracts have multiple applications, such as banking, real estate, voting, and construction. For instance, Ethereum’s smart contracts can automate wages to labourers based on their working hours.

2. DApps

Another application of Ethereum Blockchain is Decentralized Applications (DApps) development. The decentralized platform allows businesses and developers to develop apps accessible from anywhere on the Ethereum network. DApps are open-source applications that incentivize miners by giving them a small cryptography token for every mining.

The partnership between Microsoft and ConsenSys has created an even bigger opportunity for developers who are using Ethereum to build DApps. The partnership has brought in the concept of “Ethereum Blockchain as a Service” (EBaaS). EBaaS provides developers with a cloud-based blockchain environment with a single click.

Since these DApps are decentralized, one of the biggest advantages of them is that they do not undergo downtime and cannot be shutdown. They also enable faster payment and reliable data records.

Must Read: What is Blockchain & its Architecture

Decentralized Autonomous Organizations

Decentralized Autonomous Organizations (DAOs) are completely decentralized, and autonomous organizations operate based on smart contracts. With its complete flexibility over creating smart contracts, Ethereum becomes the perfect platform for DAOs. DAOs don’t have a single owner; they are owned by every person who has a token for the organization.

Also Read: Best Ethereum Wallet

Concluding

Ethereum Blockchain has many more applications that are worth noting. The careers in the Blockchain field are rising as it has changed the landscape of technology. If you are interested in pursuing a Blockchain developer’s career, you can check upGrad’s Advanced certificate program in blockchain technology.

What is the difference between Ether and Gas?

Although both of them are digital currencies of the Ethereum blockchain, they have considerable differences. Ether is basically a fuel that drives transactions on the Ethereum network. It is generated as a reward to the miners for adding blocks to the blockchain in a proof-of-work system. In simple words, it is a digital asset bearer that does not require the approval of a third party to facilitate transactions. Gas is a separate unit introduced solely to compensate for the amount of computational effort required in executing operations on the Ethereum network. It allows for a differentiation between the actual valuation of Ethereum and the computational cost of using Ethereum's Virtual Machine(EVM).

What are Ethereum killers?

Ethereum killers, in simple terms, are the forthcoming rivals of the Ethereum blockchain. They aim to capitalize on the shortcomings of Ethereum. These third-generation blockchains offer more decentralization, low transaction fees, energy-efficient network, and higher transaction speed. Some of the well-known Ethereum killers are Cardano, Solana, Binance Smart Chains, Polkadot, Zcash, Avalanche, etc. These cryptocurrencies have attracted investors’ attention and have evolved exponentially in the past few years but whether they will be able to dethrone Ether completely or not is a point of debate.

What is Ethereum 2.0 and when is it getting released?

Ethereum 2.0 is basically an upgraded and better version of the existing Ethereum blockchain being launched in an attempt to address the issues prominent in the current version. The major change in the newer version will be the transfer to the proof-of-stake mechanism which will make the network more secure and scalable. The capacity of transactions is also expected to see a major increase from 15 transactions per second to tens of thousands of transactions per second. Ethereum 2.0 is being released in three phases, namely, Phase 0 which was launched in December 2020, Phase 1 is expected to be launched in the second quarter of 2022, and Phase 2 in 2023.

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