1. Introduction to Ethereum

How Does Ethereum Work?

Ethereum, like other cryptocurrencies, uses blockchain technology. Imagine a very long chain of blocks linked together, with all of the information about each block known to every member of the blockchain network. With every member of the network having the same knowledge of the blockchain, which functions like an electronic ledger, distributed consensus can be created and maintained about the status of the blockchain.

Blockchain technology creates distributed consensus about the state of the Ethereum network. New blocks are added to the very long Ethereum blockchain to process Ethereum transactions and mint new Ether coins, or to execute smart contracts for Ethereum dApps.

The Ethereum network derives its security from the decentralized nature of blockchain technology. A vast network of computers worldwide maintains the Ethereum blockchain network, and the network requires distributed consensus—majority agreement—for any changes to be made to the blockchain. An individual or group of network participants would need to gain majority control of the Ethereum platform’s computing power—a task that would be gargantuan, if not impossible—to successfully manipulate the Ethereum blockchain.

The Ethereum platform can support many more applications than ETH and other cryptocurrencies. The network’s users can create, publish, monetize, and use a diverse range of applications on the Ethereum platform, and can use ETH or another cryptocurrency as payment.

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