What is Ethereum Network?

Today, one of the most valuable and leading cryptocurrencies in the world is Ethereum. In fact, it is a favourite of many investors, as in the last two years, there has been a huge surge in its demand because of an increasing popularity of digital wallets. Let us discuss what is Ethereum and how does it work?

What is Ethereum?

The simplest definition of Ethereum is that it is a software platform that is decentralised and powered by blockchain technology. A blockchain can be described as a distributed ledger or database that is shared amongst different nodes in a computer network. As a database, this technology stores information electronically in a digital format.

Ethereum can be utilised by any person to develop a secure digital technology. This crypto currency was designed to be a “token,” so as to pay for work done and to support the blockchain. However, nowadays, participants also utilise it to pay for tangible services and goods, if the buyer accepts it. The design of Ethereum is meant to be decentralised, secure, programmable, and most importantly, scalable. This is the reason why it is the blockchain of choice for many entrepreneurs and developers.

Natively, Ethereum was meant to support smart contracts, a self executing contract that outlines the term of agreements between a seller, and a buyer, thereby making all transactions irreversible and trackable. In fact, for the proper functioning of decentralised application, smart contracts become a vital and indispensable tool.

How does Ethereum work?

A paper was written in 2014 by the creator of Ethereum, Vitalik Buterin. This paper meant to introduce Ethereum and how it worked. The platform was consecutively launched in 2015 by the founder of blockchain software company, Joe Lubin, and Buterin. This paper explains that, beyond being a secure payment method, Ethereum has huge potential. However, currently the crypto currency that has overtaken bitcoin is utilised in supply chain management, identity management, as a medium to pay transaction fees, as an investment, or a payment method for tangible goods and services.

What is Ethereum network?

The biggest obstacle in managing decentralised networks is standardisation. Ethereum runs on millions of computers simultaneously, each computer using a different blockchain technology. To have some sense of control and standardisation over the blockchain, Ethereum utilises different types of networks that are composed of single nodes. These networks, which are also known as clusters are linked together, creating a collection of nodes, in a peer to peer network.

What is a node?

Typically, a node has an individual client software running on it, in addition to a complete copy of all databases related to all other nodes. Hence, every single node has the capability to independently question and verify the blockchain. This interdependency prevents the development of rogue nodes or malicious behaviour from manipulating or mis-using the shared information.

What are the types of Ethereum networks?

There are two types of Ethereum networks, namely, public and private networks. Both networks have their own limitations, usage and characteristics when it comes to smart contracts or transactions. The main difference between a public and private network is that a public one is permission-less, whereas a private one is permissioned. A public network operates in an open environment that allows any person to participate or join in the network. In contrast, a private network has membership requirements and only trusted participants that were given permission to join by network administrators can gain access.

Evidently, the number of opportunities on a public network are more, specially for developers to conceive apps and smart contracts. However, due to its accessibility, it becomes simpler for malicious agents to destroy, modify or delete sensitive data. Ethereum can be further divided into two groups on the basis of where they were hosted. These groups are known as testnet or mainnets. A mainnet can be described as the one where a new project starts, whereas a testnet is utilised by developers to experiment with the code before they launch on the mainnet.

Originally, all traffic was managed by the Ethereum foundation, but due to a massive spike in smart contracts, the mechanism transformed into a hybrid public-private network. Moreover, the frontier group launched a public mainnet in July 2015. The consequent testnet was launched in 2016 February and in 2017 September, Metropolis introduced a new set of network parameters termed as Casper Proof Of Stake (POS). The launch of Casper POS made mining with proof of work obsolete. As of 2018 March, there are three types of Ethereum networks, namely, the public mainnet, the testnet and the private mainnet. The public mainnet has two variations, namely Metropolis and home state. Private mainnet on the other hand, are hosted by a third-party service, such as Amazon Web services, or Microsoft’s Azure. Testnets are mainly utilised by coders to experiment before they launch it on the main net.

Conclusion

Ethereum is an open source blockchain that is mainly utilised for its smart chain functionality. Ethereum network contains peer to peer collection of nodes.