What is Ethereum? Smart contracts, Ethereum 2.0 and other cryptos on the blockchain

Ethereum is a decentralised open-source blockchain technology with its own currency, Ether. The blockchain network serves as a framework for the execution of decentralised smart contracts as well as various other cryptocurrencies. 

Ethereum and Smart Contracts 

A smart contract is a self-executing contract in which the conditions of the buyer-seller agreement are directly encoded into lines of code. The code and the agreements contained within it are spread across a decentralised blockchain network. Transactions are trackable and irreversible, and the code controls the execution. 

Ethereum was the first to introduce the concept of a blockchain smart contracts. Smart contracts were created to eliminate the need for trusted intermediaries between contractors, lowering transaction costs and enhancing transaction reliability. 

Ethereum's most significant innovation was the creation of a platform that enabled it to execute smart contracts using the blockchain, which amplifies the advantages of smart contract technology. According to co-founder Gavin Wood, Ethereum's blockchain was conceived as a sort of "one computer for the entire planet" that could theoretically make any programme more durable, censorship-resistant, and fraud-resistant by running it on a globally dispersed network of public nodes. 

Hosting other cryptocurrencies 

Using the ERC-20 compatibility standard, Ethereum's blockchain has the ability to host other cryptocurrencies known as "tokens". In fact, this has been the most prevalent application of the Ethereum blockchain platform to date. More than 2,80,000 ERC-20 compliant tokens have been issued so far. Over 40 of these, including USDT Tether, LINK, and BNB, are among the 100 most valuable cryptocurrencies by market capitalization. 

Ethereum 2.0
With the Ethereum 2.0 update in the latter half of 2022, the blockchain network intends to transition to a proof-of-stake consensus mechanism from a proof of work consensus mechanism which is relatively less detrimental to the environment. This change has been on the Ethereum roadmap since the network's inception, and it would see the introduction of a new consensus mechanism as well as sharding as a scalability option. The existing Ethereum chain will be renamed the Beacon Chain and will act as a settlement layer for smart contract interactions on other networks.

Also Read: What is Ethereum? Is it a blockchain or crypto? History, co-founders and more, find out here - BusinessToday

Also Read: Gita Gopinath is not alone in avoiding the crypto party: Here are top 5 economists who said no to crypto - BusinessToday