Ethereum (ETH) is the second most popular cryptocurrency right after Bitcoin (BTC). Along with BTC, Ethereum transactions make most of the daily crypto market capitalization on a global scale. Just like Bitcoin, the Ethereum network is based on blockchain technology, but its chain offers far more utility and flexibility than the classic Bitcoin blockchain.
Startups, developer teams, and crypto enthusiasts around the world use Ethereum and its currency Ether as an innovative financial tool, payment method, and store of value.
Additionally, it is also used as a means of powering smart contracts and decentralized apps that create whole new digital ecosystems based on the open-source Ethereum blockchain, with really low transaction fees.
Let’s take a look at how the Ethereum blockchain works, what it can be used for, and how big it is.
Cryptocurrency and Blockchain Technology
The most popular cryptocurrencies on the market all use decentralized blockchain technology in order to facilitate transactions and send data. Bitcoin was the first digital currency and it was also the first blockchain which was later copied or at least largely imitated by developers when they created hundreds of altcoins such as Litecoin (LTC), Bitcoin Cash (BCH), Monero (XMR), and others, including Ethereum. However the Ethereum blockchain became something very different from the Bitcoin network.
Blockchain technology is basically a type of data storage in the form of blocks that contain information about transactions and all sorts of other data such as programming code or valuable web developer data used to power online ecosystems. When a cryptocurrency has a blockchain, this means that all amounts of that crypto and all transactions are located within its blockchain that acts as a distributed, public ledger of transactions. Miners are responsible for validating new transactions and creating new blocks of the chain.
People don’t actually have their cryptos stored in their digital wallets. They store the private keys that give them access to their funds, proving they are the owners of certain cryptos. Blockchains have impeccable security since they are decentralized and use special algorithms, and then make sure there are no scams such as double spending of the same funds by any malicious individuals.
Apart from this, blockchains enable lightning-fast transactions of funds, much faster than any classic bank transfer or wire transfer, which is another characteristic that makes cryptocurrencies a highly versatile asset for transferring money and information.
How Does the Ethereum Blockchain Work
The Ethereum blockchain is a fully decentralized network with no central authority or entity such as a company or developer team that has full control over the network. Instead, the blockchain is powered by the joint computing power of system nodes, miners that validate every transaction on the blockchain to make sure it is legit. Users can search the Ethereum blockchain to check their transactions using Etherscan Ethereum blockchain explorer. As opposed to other cryptocurrencies that are designed mainly as a form of digital cash, Ethereum has higher functionality and can also perform numerous computational tasks during the mining and transfer verification process.
Since its launch in 2015 by Russian programmer Vitalik Buterin, Ethereum has gained a large global community of supporters and enthusiasts that actively contribute to the popularity of the network. Its blockchain has become a synonym for crypto multifunctionality because it offers users the capability to conduct smart contracts and power decentralized applications.
Over the years, the Ethereum network has become a base for numerous ERC20 tokens that use the ETH blockchain and there are also plans to move the whole network to a proof of stake algorithm rather than the current proof of work verification method. This planned upgrade is called Ethereum 2.0 or Ethereum 2 and it will enable even more advanced options for users and developers.
Smart contracts are a basic feature of the Ethereum blockchain. Usually, contracts between two interested parties in the real world require intermediaries such as lawyers and state institutions that check if a contract complies with rigid legal regulations before it can be signed.
The ETH blockchain enables people to conduct all sorts of contracts without the involvement of any third party, directly between themselves. A web developer can make a contract directly with their client using Ethereum, independently of local laws, or a startup can create a contract on their own terms with a potential investor, agreeing to terms that aren’t influenced by any other factor beyond the two involved parties. These contracts are especially handy for the fast and reliable creation and powering of decentralized applications.
This ability to facilitate fast and simple agreements is called smart contracts. These contracts make doing business far simpler and easier because a contract can be signed real fast and you don’t have to consult any central authority before a contract can take effect. Smart contracts are also used as the powering mechanism behind DAOs (Decentralized autonomous organizations) that are used to automate transaction processes on the Ethereum blockchain.
Decentralized Applications (Dapps) are all applications built on the Ethereum blockchain using the ETH native programming languages, which can be combined with other popular coding languages to create apps that work independently of centralized ecosystems.
A Dapp doesn’t depend on any single web authority in order to work and the resources used to power a Dapp come entirely from the decentralized ETH blockchain. These sorts of applications are regarded as the future of decentralized internet, available to any person on the planet with access to the web. Developer teams use ETH to conduct smart contracts that enable the creation of innovative Dapps such as Uniswap, Dark Forest, Foundation, and others.
There are numerous Dapp use cases that show the high scalability of the ETH blockchain such as industries like finance, sales, and healthcare. You can also build entertaining web platforms focused on games, music, and culture which have huge business potential, all thanks to the ETH blockchain. This feature of the ETH blockchain makes it especially attractive for developer teams because it gives them the means to create all sorts of web platforms and applications independently of large, centralized web services.
Non-Fungible Tokens (NFT)
The ETH blockchain enables the creation and use of Non-fungible tokens (NFTs) which are digital assets that are entirely different than just digital cash. ETH or BTC by themselves can be used as virtual money, but an NFT is actually a token built on a certain blockchain, in this case, the Ethereum blockchain, but the token contains specific data and information about a certain project, smart contract, Dapp or any other form of information its owner decides to store using it. You can even turn a book, movie, or piece of art into NFTs and store them using the Ethereum blockchain.
NFTs are unique digital properties because each token is one of a kind, containing specific data that can’t be copied or counterfeited. This feature is something that has been introduced on the crypto market by Ethereum as a way of tokenizing different data and assets.
In order for transactions and data to be processed through the ETH blockchain, Ethereum full-nodes store blocks of data and facilitate operations such as smart contracts. Archive nodes on the other hand are a simplified method used to identify Ethereum nodes running in archive mode.
Archive nodes aren’t necessary for facilitating transactions of data and funds through the ETH blockchain but they are an important part of the network because they house information about the transaction history and data flow of the network. Ethereum archive nodes house several terabytes of network data.
Ethereum Blockchain Size
How big the Ethereum blockchain actually is in size is a common question, since the supply of ETH isn’t capped like that of Bitcoin and the ETH chain is constantly growing at different paces, depending on network traffic. Subsequently, there isn’t a number you can put on the ETH blockchain size as a definite figure of size, but you can track the growth of the blockchain using different specialized websites such as Blockchair or Ycharts that show the exact size of the chain on a daily basis.
The growth of the network is directly linked to the exponential rise in popularity and value of Ether which won’t be going away anytime soon.
A Few Words Before You Go…
The Ethereum blockchain is growing in size fast, which is all a result of the enormous popularity achieved by the ETH ecosystem through the versatile functions and options it offers users, from a means of payment all the way to smart contracts and Dapps. Ethereum is bringing the future of a decentralized web to life and people all over the world are recognizing this and joining the ETH community.