Ethereum is a popular crypto currency after Bitcoin. It is not just considered a cryptocurrency but is currently a revolutionary platform that has transformed the blockchain space with the ability to support decentralized applications (dApps), smart contracts and much more. So it cannot be limited to just one digital currency. Because it has brought a huge revolution in this sector where while Bitcoin introduced the concept of peer-to-peer digital money, Ethereum expanded this concept to create a programmable blockchain that enables a wide range of uses beyond currency. To know about this, we first need to understand about Ethereum. So let's know about it very briefly.
Ethereum is an open-source, blockchain-based platform designed to allow developers to create and deploy decentralized applications which was launched in 2015 and was launched by Vitalik Buterin and a team of developers. The digital currency we know as ETH is essentially its native crypto. Used to gain activity on the network and incentivize participants.
[source](https://pixabay.com/photos/eth-ethereum-cryptocurrency-coin-6851390/)
Another interesting thing that smart contract is one of Ethereum’s biggest innovations. Its great uses case is- it's self-executing contracts with terms written directly into the code. These contracts automatically perform actions when the terms are met, eliminating the need for intermediaries. This capability has led to an explosion of dApps across finance, gaming, supply chains, and more. Initially, Ethereum used a Proof of Work (PoW) consensus mechanism similar to Bitcoin.
However, it has now transitioned to Proof of Stake (PoS) through the Ethereum Merge, which it did three years ago. And it helps save a huge amount of energy as it reduced the network’s energy consumption by over 99% and introduced staking — where users can lock up ETH to help secure the network and earn rewards. Ethereum powers the majority of the *DeFi (decentralized finance) ecosystem, enabling protocols like Uniswap, Aave, and Compound. It supports NFTs (Non-Fungible Tokens) with the most popular NFT platforms running on Ethereum. Developers and companies use Ethereum to build everything from games and marketplaces to identity solutions and DAOs (decentralized autonomous organizations).
Despite its power, Ethereum faces challenges like high gas fees and scalability issues during peak usage. However, future upgrades such as Layer 2 Scaling and Sharding are designed to address these issues. Ethereum is at the heart of blockchain innovation. Its impact on the crypto space is immense, serving as the foundation for countless decentralized solutions. With continued development and a vibrant community, Ethereum remains a key player in shaping the future of the decentralized internet. If you want to know more details about this, you can see this [article](https://banking-directory.com/ethereum-eth-the-backbone-of-decentralized-applications-and-smart-contracts/).
