Ethereum is not your usual blockchain scenario. Here, you can earn for yourself by earning your token money called Ether. Its inner workings and purpose are different from what other blockchain entities are doing. This precise statement is what provides us with a cusp of our discussion that will happen in the following words. All we are going to do is explain what is behind the second most famous (and increasingly popular) blockchain platform in the world. They say that Ethereum is the most complex blockchain system ever created. We will explain its operation and mechanisms in simple terms.
Before entering, you should know its basic concept: Blockchain
Blockchain is a type of system that generally involves a transactional machine that cryptographically secures data when it is in a shared state. This was the idea behind the famous bitcoin and it is also the concept behind Ethereum.
As blockchain data it is traceable and leaves a trace when a new block of information is added. Through blockchain, one can secure a piece of data in a transaction (or a transactional machine), which is in a shared state.
Now that you know a bit about Blockchain, let’s talk about Ethereum:
Remember when we talked about blockchain, we told you that it generally involves a transactional machine, well that machine in this example is Ethereum. In other words, it is a transaction-based state machine. A machine like this receives inputs and on that occasion an action transpires, thus taking it to a new state.
The states of this blockchain network:
In Ethereum, the first state is the “blank” state. Right after any transaction occurs, there is a transition to another state. The new state is what we call a final state. This final state is what we say when the transaction completes. This final state in Ethereum is numbered in the millions. To store your data, it is grouped into blocks.
The processes that follow:
A block with the newest point is current and chained together with the previous block. Each block contains a different series of transactions. For the transition of different states to occur, a valid transaction is required.
Different Ethereum nodes (information systems) around the world try to find if transactions are valid. Once they are deemed valid, the valid badge is issued to them. This whole process is known as mining. Due to the mining of these nodes (which are generally controlled by application programmers and data scientists), the node controller can obtain the cryptocurrency from the platform called Ether. ‘Ether’ provides the intrinsic value for these nodes to make the platform offers to compute anything, but with their own resources. And so it is, ladies and gentlemen, how Ethereum essentially works.
Bonus: How can ether be used?
As we have mentioned before, Ether can be used to provide the intrinsic value to the platform nodes, which are usually engineers or programmers. They can use this cryptocurrency to trade on crypto exchanges and buy things available on the Ethereum platform.