What is Ethereum?

Ethereum is a decentralized blockchain platform that establishes a peer-to-peer network that securely executes and verifies application code, called smart contracts. Ethereum is one of the oldest and most popular crypto projects. As of December 2021, it ranks #2 worldwide by market capitalization (~ 500m US Dollars). It was the first blockchain to incorporate programmable smart contracts.

Smart contracts allow participants to transact with each other without a trusted central authority. Transaction records are immutable, verifiable, and securely distributed across the network, giving participants full ownership and visibility into transaction data. Transactions are sent from and received by user-created Ethereum accounts. A sender must sign transactions and spend Ether, the native cryptocurrency of Ethereum, as a cost of processing transactions on the network.

Ethereum has several major problems, caused by its popularity and lack of continuous efforts while the network grew. The first is that gas fees have become very expensive in the last couple of years because the network has become so popular and is therefore very congested.

Validators prioritise users who are willing to pay the highest fees for their transactions. For example, the average transaction at the time of writing on crypto exchange Uniswap costed around US$44 in gas fees in October 2021.

Additionally, transactions can take minutes to complete, which is not feasable anymore in modern times.

Ethereum is powered by smart contracts, which allow the blockchain to automatically executed programmed contracts. Such smart contracts are usually programmed using the Solidity programming language. Solidity has the world’s largest community of all smart contract languages.