Introduction to Ethereum
Ethereum (ETH) is an open-source, decentralized blockchain platform that builds upon Bitcoin's foundation as a second-generation blockchain. Key innovations include:
- Native cryptocurrency (ETH) for digital payments
- Smart contract functionality enabling decentralized applications (DApps)
- Support for decentralized finance (DeFi) ecosystems
As the second-largest cryptocurrency by market capitalization, Ethereum has processed over $11 trillion in value across 2,900+ projects.
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Ethereum's Core Architecture
Account Structure
Ethereum features two account types:
| Account Type | Description |
|---|---|
| External Owned | Controlled by users via private keys |
| Contract | Managed by smart contract code |
Both account types can:
- Hold ETH and tokens
- Initiate transactions
- Interact with smart contracts
Ethereum Virtual Machine (EVM)
The EVM serves as Ethereum's computational engine, featuring:
- Execution environment for all smart contracts
- Distributed state machine architecture
- Support for multiple programming languages (including Solidity)
The Ethereum Merge Explained
Transition to Proof-of-Stake
Ethereum migrated from Proof-of-Work (PoW) to Proof-of-Stake (PoS) through three phases:
Phase 0 (Beacon Chain Launch)
- Introduced parallel PoS chain (December 2020)
- 1.3M+ ETH staked by validators
The Merge
- Combined Beacon Chain with mainnet (2022)
- Replaced PoW with PoS consensus
Sharding
- Future upgrade (2023-2024)
- Will split network across 64 chains
Benefits of PoS
- 99.95% reduced energy consumption
- Increased security through staking
- Scalability through sharding technology
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ETH Tokenomics
Supply Mechanics
- Initial ICO price: $0.31 (2014)
- Current circulating supply: 122M ETH
Inflation controlled through:
- EIP-1559 fee burning
- Reduced block rewards (now 2 ETH/block)
Founding Team
Key Contributors:
- Vitalik Buterin: Primary architect of Ethereum
- Gavin Wood: Created Solidity language (now at Polkadot)
- Charles Hoskinson: Later founded Cardano
FAQ
Why is Ethereum merging to PoS?
The transition reduces environmental impact while improving scalability and security through staking mechanisms.
How does staking work on Ethereum?
Validators must stake 32 ETH to participate in block validation and earn rewards.
What happens to miners after The Merge?
Ethereum miners transitioned to validating through staking, with mining equipment becoming obsolete for ETH.
When will sharding be implemented?
Full sharding implementation is expected between 2023-2024.
Can Ethereum handle more transactions after The Merge?
While The Merge doesn't directly increase throughput, it enables future scaling solutions like sharding and layer-2 networks.