Ethereum is a public, open-source, decentralized software platform that runs smart contracts on a blockchain. It is a platform for decentralized applications (dapps) that run on blockchain technology.
Ethereum is the second-largest cryptocurrency by market capitalization, after Bitcoin.
Ethereum was proposed in 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Buterin had proposed that Bitcoin needed a scripting language for application development.
Failing to gain agreement, he proposed development of a new platform with a more general scripting language.
Ethereum was launched in July 2015 with 72 million coins pre-mined. The Ethereum Virtual Machine (EVM) is the runtime environment for smart contracts in Ethereum. It is a 256-bit register stack, designed to run the same code exactly as intended.
It is the fundamental consensus mechanism for Ethereum. Gas refers to the fuel needed to power an operation or transaction on the Ethereum network.
The amount of gas required for an operation or transaction varies depending on its complexity. For example, a simple transfer of tokens from one address to another requires less gas than a contract that creates new tokens.
There are two types of accounts in Ethereum: externally owned accounts (EOAs), and contract accounts. Each account has a private key that gives control over it to its owner.
External accounts are controlled by private keys; contract accounts are controlled by both their private key and the code stored in them. The code stored in a contract account can be viewed as that account’s “public key”.
Contracts have their own address, separate from the address of their owner account, and they can receive ETH directly from other accounts without having a private key associated with them. This makes it possible to use ETH to create trustless escrow contracts or contracts that will only execute if certain conditions are met.
It is not possible to mine Ethereum directly; instead, miners work on behalf of the network to verify and validate transactions before they are added to the blockchain. Miners are rewarded with ETH for each block they successfully mine.
The current reward for mining a block is 5 ETH.
The amount of ETH you can mine in a day depends on many factors, including:
The speed of your mining rig: A higher speed rig will mine more blocks and thus earn more ETH over the course of a day than a slower rig.
The difficulty of the mining: The difficulty of mining adjusts every epoch (roughly every 2 weeks) based on how fast blocks are being mined so that blocks are mined at an average rate of one every 10 minutes regardless of how many miners there are or how fast they are mining. A higher difficulty means it will take more work for your miner to find valid blocks, and thus you will earn less ETH over the course of a day than if mining were easier.
However, once a block is mined, it is worth the same regardless of the difficulty level when it was mined.
The price of ETH: Since miners earn rewards in ETH, the higher the price of ETH, the more valuable each reward will be and thus the more incentive there is for miners to keep mining instead of selling their rewards immediately for fiat currency (e.g., US dollars).
If ETH prices suddenly drop, some miners may choose to sell their rewards immediately in order to avoid losses, which could lead to fewer blocks being mined and confirmed over time until prices recover and miners’ incentives align with those of the network once again.