What Is Ethereum and How Does It Work?
Ethereum is a decentralized blockchain network launched in 2015. Unlike networks designed mainly for transferring digital assets, Ethereum also supports smart contracts and decentralized applications. Its native cryptocurrency is called Ether (ETH), which is used to pay transaction fees, execute operations on the network, and participate in its security mechanism. Thanks to these capabilities, Ethereum has become one of the most important infrastructures in the cryptocurrency ecosystem.
One of Ethereum’s key features is smart contracts. A smart contract is a program stored and executed on the blockchain that automatically performs predefined actions when specific conditions are met. This technology makes it possible to build decentralized exchanges, blockchain games, lending platforms, and digital tokens. As a result, Ethereum’s applications go far beyond simply buying and selling cryptocurrencies.
Ethereum also supports decentralized applications, commonly known as DApps. Instead of relying entirely on a central company or server, these applications use smart contracts and blockchain infrastructure. Major use cases include decentralized finance (DeFi), non-fungible tokens (NFTs), and blockchain-based gaming. Developers can use Ethereum’s tools and standards to create a wide range of applications and digital services.
Ethereum originally used the Proof of Work consensus mechanism. However, in September 2022, it transitioned to Proof of Stake through an upgrade known as The Merge. Under this system, validators participate in securing the network and confirming transactions by staking ETH. This transition significantly reduced Ethereum’s energy consumption. Despite its advantages, the network still faces challenges such as variable transaction fees, congestion, and potential smart contract vulnerabilities.
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