What is Ethereum? How does Ethereum work?

Ethereum: a decentralized digital currency based on blockchain technology

Ether (ETH) is a blockchain technology issue based on the Ethereum platform A digital currency with decentralized characteristics. Ethereum is an open source distributed computing platform that provides developers with an environment to build and deploy decentralized applications. Ether, the native currency of the Ethereum network, is used to pay transaction fees and reward network participants. Through smart contract technology, the Ethereum platform enables developers to create a variety of blockchain-based applications, from digital asset trading to decentralized gold.

Ethereum and Bitcoin operate similarly and both rely on on blockchain technology. Blockchain is a distributed, immutable ledger used to store transaction data. The Ethereum blockchain not only records transaction information, but also includes smart contract code and application status.

Smart contracts are self-executing codes stored on the blockchain that can only be executed automatically under certain conditions. The Ethereum platform supports various decentralized applications through the use of smart contracts, such as decentralized finance (DeFi) platforms, non-fungible token (NFT) markets, and decentralized autonomous organizations (DAO). These applications enable transactions and collaboration without intermediaries, providing users with a more secure and transparent environment. The design of smart contracts enables blockchain technology to be applied to a wider range of fields and promotes the development and innovation of the digital economy.

Ethereum plays a key role in the Ethereum ecosystem. It is widely used to pay transaction fees, incentivize miners to verify transactions, and maintain network security. In addition, Ethereum can also be bought and sold on cryptocurrency exchanges or used to purchase various goods and services.

Unlike Bitcoin, Ethereum does not have a set issuance limit. However, the Ethereum network adopted a mechanism called "Ethereum Improvement Proposal (EIP) 1559". This mechanism is designed to curb the issuance of Ethereum by burning a portion of transaction fees.

A highly volatile, risky investment, Ethereum remains one of the most important digital currencies in the world of blockchain technology and decentralized applications. As the Ethereum ecosystem continues to grow, Ethereum is expected to continue to play a key role in the future. Its unique advantages and technological innovation give it long-term potential and attract more and more investors and developers. Although investing in Ethereum carries risks, for those who understand the technology and potential behind it, holding a certain amount of Ethereum can be beneficial

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