Understanding Ethereum: What it Is and How it Functions
Ady
Whether you’ve heard of Ethereum in the context of NFTs, smart contracts or DeFi; you're on the right place. Let's break down what Ethereum actually is, how it works and the tech behind its magic.
📚 TL;DR
Ethereum is a platform for decentralized apps powered by smart contracts.
It uses a blockchain to store and verify everything transparently.
Ethereum runs on a greener, faster system called Proof of Stake.
This tech allows a trustless, secure and open internet future.
So, What is Ethereum?
A decentralized platform that lets developers build applications that don’t rely on a single server or authority. Think of it like the internet, but instead of apps running on someone else's server, they run on a global network of computers.
These apps are called dApps (decentralized applications) and they’re powered by smart contracts. Aka, little bits of code that automatically run when conditions are met. No middlemen, no paperwork.
Image an app that sends you money only if you complete a task, and it can verify that on its own. That’s a smart contract.
🔐 Ethereum = Trustless + Secure + Open
Trustless: Don’t need to trust anyone; the code and network handle everything.
Secure: Built on blockchain tech, meaning data is nearly impossible to tamper with.
Open-source: Anyone can build, use or improve Ethereum apps.
The tech behind Ethereum
Ethereum runs on a blockchain, which is a public ledger. Think a giant notebook that records everything that happens on the network.
Each time something happens, like a transaction or smart contract execution, it’s recorded in a block and added to the chain. This way, the history of Ethereum is transparent and tamper-proof.
Ok, so smart contracts this and smart contracts that, but can we make it more easy to understand? Yes! A smart contract is a code stored on the Ethereum blockchain that runs automatically when triggered.
Example of a Smart Contract:
🔄 Ethereum's Consensus Mechanism: How decision are made on the blockchain?
For Ethereum to work, thousands of computers need to agree on what happened. This is where ₊⊹consensus mechanisms₊⊹ come in. It’s how the network agrees on “the truth".
But what is that? Consensus mechanisms? Well, since 2022, Ethereum uses Proof of Stake (PoS). Before that, it used Proof of Work (just like Bitcoin). Let’s deep dive on this.
1) Proof of Work (PoW) - The old model ⛏️
Computers (aka miners) solved complex puzzles to validate transactions.
First one to solve the puzzle got to add the next block and earn ETH.
The problem? It used A LOT of energy, it wasn’t sustainable.
2) Proof of Stake (PoS) - The New and Greener Model 🌱
Now, instead of mining, validators are chosen to propose and validate blocks.
To become a validator, you stake (lock up) at least 32 ETH.
You’re randomly chosen to validate a block.
If you’re honest = you earn ETH, but if you cheat = you lose some or all of your stake.
The bright side? Energy efficient, more secure and easier to scale. PoS also opens the door for more people to participate through staking pools, making Ethereum more decentralized.
Ok, perfect everything clear as water for now. But, how it all comes together? So, when you interact with Ethereum, this happens:
You send a transaction (like sending ETH or interacting with a smart contract).
Validators confirm and add it to the blockchain.
The smart contract runs (if triggered).
The result is stored on the chain forever.
No bank, no company, no permission needed.
💡 Why should you care about this crazy digital transactions and smart contracts idea?
Well, Ethereum isn’t just tech… It’s a new way of building and owning the internet. It enables decentralized finance (DeFi), NFTs, DAOs (Decentralized Autonomous Organizations), decentralized social media, privacy and so much more. And the best part? Anyone can build on it… Including you!
👩💻 Ready to Go Deeper?
If you want to explore more:
🦄 BONUS: Learn by doing
Want to see Ethereum in action? Try interacting with a dApp like:
Yes, you can click on the links above with no problem, I won’t steal your identity or hack you :) But since we’re learning about a decentralized ledger, it’s time to be careful about our digital identity and everything we “own” on the web/socials.
Pro tip since we’re starting on this world: Always you want to try a dApp look for it on X first and verify it’s the verified account and with the true links.
Real uniswap on X:
Stranger danger: Always look everything.
🌍 Stay Curious, Stay Onchain
Ethereum is just the beginning. If you're excited about the future of the internet, smart contracts and everything Web3 you're in the right place. I’ll be breaking down more blockchain concepts in plain language, sharing tools, degen experiments and stories from the frontlines of crypto.
Follow me on X: @adyonchain for daily threads, beginner tips and good onchain vibes.
✨ And keep exploring this blog your journey into Web3 is just getting started.
Thank you for reading and being here! Until next time!
Ady 🌱
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