Ethereum Explained! 🚀 (Ultimate Beginners’ Guide! 📚) How Ethereum Works 💻 & Why it's Undervalued 🤑

Summary

The video script delves into the distinctions between Ethereum and Bitcoin, clarifying that while both are applications of blockchain technology, they serve different purposes. Ethereum, proposed by Vitalik Buterin, is a blockchain-based software platform that allows for the creation of decentralized applications (DApps) and smart contracts, which can automate and execute agreements without intermediaries. Ether, the native cryptocurrency of Ethereum, is used to pay for computational services on the network, with its supply designed to be deflationary. The script also explains the concept of 'gas' as transaction fees on the Ethereum network and touches on the Ethereum Virtual Machine (EVM), which enables a global decentralized supercomputer. Additionally, it covers ERC20 tokens, a standard for creating new tokens on the Ethereum blockchain, and the shift from Proof of Work to Proof of Stake for network validation, emphasizing the latter's energy efficiency. The summary encourages viewers to explore the potential of Ethereum and consider its place in their investment portfolio, while highlighting the importance of secure storage with hardware wallets like Tangem.

Takeaways

• 📘 Ethereum is a blockchain-based software platform created by Vitalik Buterin, distinct from Bitcoin.
• 🔑 Blockchain technology is founded on three pillars: decentralization, transparency, and immutability.
• 🌐 Decentralization in blockchain means data is stored across multiple locations and no single entity controls it.
• 🔍 Transparency ensures that all transactions are recorded on a public ledger, visible to everyone and resistant to alteration.
• 🔒 Immutability refers to the unchangeable nature of data once recorded on the blockchain, secured by cryptographic processes.
• 💡 Bitcoin functions as digital currency for transactions and value storage, whereas Ethereum serves as a programmable platform for decentralized applications (dApps).
• 🛢️ Ether, the native cryptocurrency of the Ethereum network, is used to pay for computational services and execution of smart contracts, likened to 'digital oil'.
• 💰 Gas is the term for the fee required to perform operations on the Ethereum network, with prices fluctuating based on network demand and complexity of transactions.
• ⛓️ Ethereum has transitioned from a Proof of Work consensus mechanism to a Proof of Stake, aiming to be more energy-efficient and secure.
• 💼 Smart contracts are self-executing contracts with the terms directly written into code on the blockchain, enabling trustless transactions without intermediaries.
• 📈 ERC20 is a token standard on the Ethereum network that defines rules for creating and issuing tokens, ensuring compatibility and functionality within the ecosystem.
• 🚀 Ethereum is an evolving technology with ongoing development aimed at improving efficiency, security, and user experience for future growth and adoption.

Q & A

What is the primary distinction between Ethereum and Bitcoin?

Ethereum is a blockchain-based software platform that allows for the creation of decentralized applications (dApps), while Bitcoin is a digital currency used for peer-to-peer transactions and as a store of value.

Who is the creator of Ethereum and when was it launched?

Ethereum was created by Russian-Canadian programmer Vitalik Buterin, and it went live in 2015.

What are the three pillars of blockchain technology?

The three pillars of blockchain technology are decentralization, transparency, and immutability.

How does decentralization in blockchain work?

Decentralization in blockchain means that data is recorded and stored on multiple devices in various locations worldwide, and no single person, company, or government controls the data.

What role does Ether play in the Ethereum network?

Ether is the native cryptocurrency of the Ethereum blockchain, used to pay for the computational services required to build and run decentralized applications on the network.

What is the concept of 'gas' in the context of Ethereum transactions?

Gas in Ethereum is a measure of the computational effort required to execute a contract or a transaction. It determines the transaction fees, which are paid in Ether to the network validators.

How does the proof of stake protocol work in Ethereum?

Proof of stake is a consensus mechanism where validators 'stake' their Ether as collateral to propose and validate new blocks. Validators are chosen based on the amount of Ether they have staked and the length of time it has been staked. Validating a block successfully earns them a reward, while proposing an invalid block results in a penalty.

What is an ERC20 token and how does it relate to the Ethereum network?

An ERC20 token is a type of cryptocurrency that adheres to a specific set of rules defined by the ERC20 standard on the Ethereum blockchain. These tokens can represent various assets or utilities and are used for specific purposes within the Ethereum ecosystem.

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How does the Ethereum Virtual Machine (EVM) function within the Ethereum network?

The EVM is a global decentralized supercomputer that allows for the execution of smart contracts. It improves the flexibility of the software and ensures the separation of each software host and application on the Ethereum network.

What are smart contracts and how do they operate on the Ethereum platform?

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They operate on the Ethereum platform by automatically enforcing and carrying out the terms of a contract within a trusted environment, eliminating the need for a central authority.

Why is Ethereum considered a more programmable blockchain compared to Bitcoin?

Ethereum is considered more programmable because it allows users to build and deploy decentralized applications (dApps) and execute smart contracts, which are not possible on the Bitcoin blockchain that is primarily designed for transactions.

How does the issuance and burning of Ether affect its supply and potential value over time?

As the Ethereum network is used more, Ether is burned or taken out of circulation, making it deflationary. If the supply of Ether continues to decrease while demand increases, the price of Ether is likely to rise substantially over time.

Outlines

00:00

😀 Introduction to Ethereum and Blockchain

The video script begins by addressing the common misconception of equating Ethereum with Bitcoin and blockchain technology. It outlines the intention to clarify the distinctions among them. Ethereum, proposed by Vitalik Buterin in 2013 and launched in 2015, is described as a blockchain-based software platform. The script delves into the fundamental concepts of blockchain, emphasizing its three key features: decentralization, transparency, and immutability. Decentralization ensures data is stored across multiple locations and not controlled by a single entity. Transparency allows for a public ledger that records transactions in a tamper-proof manner. Immutability guarantees that once data is recorded, it cannot be altered. The script also touches on the importance of understanding these features before exploring Ethereum's role within the blockchain ecosystem.

05:00

💡 Ethereum as a Programmable Blockchain

The second paragraph explains the unique use cases of blockchain technology for both Bitcoin and Ethereum. Bitcoin is presented as a digital currency for transactions and as a store of value, while Ethereum is characterized as a programmable blockchain that enables the creation of decentralized applications (dApps). The Ethereum network is likened to an app store where developers can build and deploy applications. The concept of decentralized finance (DeFi) is introduced as a movement to create a more transparent and trustworthy financial system. The paragraph also distinguishes between Ether, the cryptocurrency of the Ethereum network, and the network itself. Ether serves as a means of payment for the computational resources required to build and run applications on Ethereum, known as 'gas.' The script highlights the deflationary nature of Ether, as its supply growth is decreasing over time due to 'burning' in network transactions.

10:01

📊 Understanding Ethereum's Gas Fees and Validators

This section of the script discusses the intricacies of Ethereum's transaction fees, known as 'gas.' Gas prices are determined by the computational resources a transaction requires, and they fluctuate based on network demand. The script explains that gas prices are denoted in Gwei, a denomination of Ether, and that users can set a gas limit for their transactions. The concept of 'proof of stake' is introduced as the consensus mechanism that Ethereum currently uses. Validators, who are network participants that verify transactions, are required to stake Ether as collateral. The more Ether a validator stakes and the longer it is staked, the higher the chances of being selected to validate the next block. Validators are rewarded for successful block verification, but face penalties for proposing blocks with fraudulent transactions. The script also mentions the potential regulatory considerations regarding proof-of-stake assets.

15:04

💻 The Structure of the Ethereum Network

The script breaks down the Ethereum network into three layers: the hardware layer consisting of nodes that validate transactions, the software layer where smart contracts are written in languages like Solidity, and the application layer where dApps are built and run. Smart contracts are self-executing contracts with terms directly written into code. The Ethereum Virtual Machine (EVM) is described as a global decentralized supercomputer that allows for the execution of these contracts. The application layer is where developers can create and launch dApps, which are decentralized applications that operate on the Ethereum blockchain. The script also introduces ERC20 tokens, a token standard that dictates the rules for creating new tokens on the Ethereum network, ensuring compatibility and functionality within the ecosystem.

20:04

🚀 Ethereum's Development and Investment Considerations

The final paragraph focuses on Ethereum's ongoing development and the potential for investment in Ether. It advises investors to use reputable cryptocurrency exchanges and to store their assets in secure cold storage hardware wallets, specifically recommending the Tangem wallet. The script emphasizes the wallet's ease of use, high security standard, and affordability. It also provides a cautionary note on Ethereum's speculative nature and the importance of being aware of its developmental phase and future roadmap. The video concludes with an invitation to learn more about cryptocurrency wallets, private keys, and seed phrases, and to explore the potential of Bitcoin for wealth management.

Keywords

💡Ethereum

Ethereum is a blockchain-based, open-source, decentralized software platform that was proposed by Vitalik Buterin in 2013 and went live in 2015. It is distinct from Bitcoin in that it allows for the creation of smart contracts and decentralized applications (dApps), making it a versatile platform for various use cases beyond cryptocurrency transactions. In the video, Ethereum is a central theme, highlighting its role in the evolution of blockchain technology and its differences from Bitcoin.

💡Blockchain

Blockchain is a distributed ledger technology that underpins cryptocurrencies like Bitcoin and Ethereum. It is characterized by three main features: decentralization, transparency, and immutability. The video explains that blockchain operates on a network of computers, ensuring that data cannot be altered once recorded, and that no single entity has control over the network. This technology is foundational to understanding Ethereum and Bitcoin.

💡Decentralization

Decentralization refers to the distribution of data storage and management across multiple locations and devices, rather than a single central authority. In the context of the video, decentralization is a key principle of blockchain technology, which means no single entity controls the blockchain. This is illustrated by contrasting traditional centralized systems like banks with the decentralized nature of blockchain, where transactions are managed collectively by network participants.

💡Transparency

Transparency in the blockchain context means that all transactions are recorded on a public ledger, making them visible to anyone on the network. The video emphasizes the importance of transparency by comparing it with the lack of visibility in traditional financial systems, such as government spending. Transparency in blockchain technology fosters trust and accountability, as it allows anyone to verify transactions.

💡Immutability

Immutability is the property of blockchain data that ensures once a piece of information is recorded, it cannot be changed, forged, or altered. This is achieved through cryptographic and hashing processes. In the video, immutability is highlighted as a key feature that contributes to the security and reliability of blockchain technology, making it resistant to tampering and fraud.

💡Ether

Ether, also known as Ethereum's native cryptocurrency, serves as a means of payment and a store of value similar to Bitcoin. However, Ether also plays a specific role in the Ethereum network by acting as 'fuel' to compensate nodes for the computational work required to process transactions and host dApps. The video explains that Ether is used to pay for network fees, known as 'gas,' which is a critical component of the Ethereum economy.

💡Gas

Gas in Ethereum is a measurement of the computational effort required to perform a transaction or execute a contract. It is a built-in pricing mechanism that determines the transaction fees on the Ethereum network. The video uses the analogy of gas as the fuel that powers transactions, with the amount of gas required depending on the complexity and storage needs of the transaction. Gas prices are denoted in Gwei, a denomination of Ether, and are crucial for users to understand when sending transactions.

💡Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They automatically enforce the terms of a contract based on predefined conditions. In the video, smart contracts are a fundamental part of Ethereum's utility, allowing developers to create trustless systems for a variety of applications, from financial transactions to supply chain management, without the need for intermediaries.

💡ERC20 Tokens

ERC20 is a token standard on the Ethereum network that defines a set of rules for creating tokens within the Ethereum ecosystem. The video mentions ERC20 tokens as a type of cryptocurrency that operates by these rules, ensuring compatibility and interoperability with other applications and services on the Ethereum platform. Examples of ERC20 tokens include Tether and Basic Attention Token (BAT), each serving different functions and utilities within the Ethereum economy.

💡Proof of Stake (PoS)

Proof of Stake is a consensus mechanism used by Ethereum to secure its network, as opposed to the Proof of Work mechanism used by Bitcoin. Validators on the Ethereum network must 'stake' Ether, effectively locking it up as collateral. The video explains that PoS is more energy-efficient than PoW, as it does not require intensive computational power to validate transactions. Validators are chosen to create new blocks based on the amount of Ether they have staked and are rewarded for validating correct blocks.

💡Decentralized Applications (dApps)

Decentralized Applications, or dApps, are applications that run on a decentralized blockchain network, such as Ethereum. They are not controlled by any single entity and can operate autonomously, thanks to smart contracts. The video discusses dApps as a key innovation enabled by Ethereum, with examples like Uniswap for decentralized exchanges and OpenSea for NFT marketplaces, showcasing the potential for a wide range of decentralized services.

Highlights

Ethereum was created by Vitalik Buterin in 2013 and went live in 2015 as a blockchain-based software platform.

Blockchain is a record of data stored on a network of computers with three unique features: decentralization, transparency, and immutability.

Decentralization in blockchain means data is stored on multiple devices worldwide and no single entity controls it.

Blockchain's transparency ensures that transactions are recorded on a public ledger, making data impossible to alter.

Immutability refers to the inability to change, forge, or alter data once recorded on the blockchain.

Bitcoin is a digital currency for payment and value storage, while Ethereum is a programmable blockchain for building software and applications.

Ether is the native cryptocurrency of the Ethereum blockchain, used to pay for computing power and space required for Ethereum network transactions.

Gas in Ethereum represents the computational steps required to execute a contract or a transaction, with its price denoted in Gwei.

Ethereum's transition from Proof of Work to Proof of Stake makes it more energy-efficient and secure.

Smart contracts are self-executing contracts with the terms of the agreement directly written into code on the blockchain.

ERC20 is a token standard that defines a set of rules for creating and issuing tokens on the Ethereum blockchain.

There are over 350,000 different ERC20 tokens issued on the Ethereum network, each with a unique function or utility.

Ethereum's development roadmap includes improvements for cheaper transactions, enhanced security, and better user experience.

Tether (USDT) is an example of a stablecoin, a type of ERC20 token that maintains a stable value equivalent to the US dollar.

Basic Attention Token (BAT) is an ERC20 token used within the Brave browser ecosystem to facilitate transactions between users, advertisers, and publishers.

Ethereum's network operates on a three-layer model: the base layer of nodes, a software layer for smart contracts, and an application layer for decentralized apps (dApps).

The Ethereum Virtual Machine (EVM) is a global decentralized supercomputer that executes smart contracts and separates software applications.

Over 2800 dApps cover a wide range of categories, from gaming to finance, operating on Ethereum's blockchain platform.

Transcripts

many people associate ethereum with

Bitcoin and some people use the words

ethereum Bitcoin and blockchain

interchangeably by the end of this video

we will understand the key differences

between ethereum and Bitcoin and their

relationship with blockchain technology

so what is ethereum metallic buterin is

a Russian Canadian programmer and

cryptocurrency researcher who came up

with the idea for ethereum in 2013 which

finally went live in 2015. the most

plain and simple explanation of ethereum

can be broken down into two words

software platform now it makes ethereum

different from other software platforms

is that it is a blockchain based

software platform so before breaking

down what ethereum is we must first

understand its underlying technological

Foundation what is blockchain the most

plain and simple explanation of

blockchain is that it's a record of data

stored on a network of computers and

there are three pillars of blockchain

that make it unique decentralization

transparency and immutability so let's

break down these three pillars star

starting with pillar 1 decentralization

the word decentralization with regard to

blockchain is twofold one it means that

the data is recorded and stored on

multiple devices in multiple locations

around the world as opposed to one

central place in two decentralization

also means that no one person company

government Authority or entity controls

the data in record storage process so

instead of traditional centralized

entities like the IRS JPMorgan or MIT

recording storing managing and

controlling their data by following

their own protocols deciding which

service to use and where the servers are

located and using their own proprietary

software and security systems to protect

their data blockchain allows for

decentralized record keeping where data

is recorded stored and managed on a

network of computers with open source

software around the world any changes to

the blockchain protocol go through a

consensus process that no one person or

entity has control over so that is the

essence of the decentralization pillar

cool pillar two transparency the word

transparency with regard to blockchain

relates to the way in which transactions

are recorded on a ledger that is

available for everyone to see and that

is saved on a network of computers

around the world making the data

impossible to change or alter so the

best way to see the value of

transparency and data recording storage

and management is by comparing these two

scenarios one currently common citizens

of the United States are not privy to

where and how every tax dollar is spent

by the United States government we just

have to take their word for it and even

if the government had to show us their

records it would be very easy for them

to create Forge or manipulate any data

they chose to share with us since they

control their own data you can see how

this scenario has not exactly

transparent or trustworthy so let's

imagine another scenario if everyone in

the United States had the ability to see

a live running Ledger of wherever every

single tax dollar was spent by the

United States government at any moment

in time basically all U.S citizens could

see a full disclosure of how the

government is managing our money and in

this scenario there is more trust and

transparency the second pillar of

blockchain Technology nice pillar three

immutability immutability simply means

that the data recorded and stored on the

blockchain cannot be changed forged or

altered and this is achieved through

cryptography and blockchain hashing

processes if you would like to watch a

more in-depth video explaining what

blockchain is and why it was developed

please check out my video guide by

clicking in the link above so to

summarize the three pillars of

blockchain Technology blockchain's

recording and storage protocols make it

such that once new data is verified it

is unmodifiable it's distributed across

a vast network of computers around the

world so it's hard to destroy and no one

person or entity controls the data or

network creating a transparent

environment amazing now that we are

familiar with some of blockchain's

important features let's talk about the

role blockchain plays in Bitcoin and

ethereum hello I'm crypto Casey and in

this video we will explore what ethereum

is what ether is how transaction fees

work and what the future holds for this

exciting new speculative technology

let's hit it

[Music]

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us sweet Bitcoin and ethereum are both

use cases of blockchain Technology with

different purposes Bitcoin is simply a

digital currency that people can use as

a form of payment to send to and from

each other or hold as a store of value

while ethereum is basically a

programmable blockchain that people can

build software on to create valuable

products and services or just for fun

Imagine the ethereum network similar to

the Apple App Store a platform where

people can build and deploy apps and due

to the decentralized properties of

blockchain Technology the software

people can build on ethereum are called

decentralized applications or dapped for

short in the nature and potential of

these decentralized applications or

dapps has inspired the idea and desire

for a crusade towards decentralized

Finance or D5 for short the D5 movement

aims to transform The Current financial

system into a more transparent and

trustworthy system like we discussed

about the scenario in the transparency

blockchain pillar segment so how is

ethereum's blockchain based software

application able to operate if it's not

owned or controlled by a central entity

or authority this leads us to the next

section what is ether

many people commonly use the word ether

in ethereum interchangeably when they

actually represent two different things

ether is the ethereum blockchains native

cryptocurrency it operates similarly to

Bitcoin in that it's a digital currency

that can be transferred to people all

around the world used as a form of

payment or act as a store of value

however ether was created for an

entirely different purpose so why does

ether exist in previous videos we

explore the similarities between Bitcoin

and gold so if Bitcoin is digital gold

ether could be described as digital oil

ether was designed with the intention of

fueling the ethereum network thinking

back to the decentralized pillar of

blockchain Technology we discussed how

open source software is distributed

across a vast network of computers

around the world so to incentivize

people to host and maintain the data on

The blockchain Ether was created as a

form of payment to fuel the ethereum

network so anyone who wants to build a

software application on the ethereum

network has to pay for the computing

power and space required using ether and

the amount of ether required for Network

fees is determined by a built-in pricing

system known as gas other key

differences between Bitcoin and ether is

that Bitcoin has a fixed Supply and

having events while ether Works

differently and is actually deflationary

see bitcoin's fixed price and having

events keep its rate of inflation low

and predictable over time until it

eventually reaches zero and if you want

to learn more about how Bitcoin halvings

work check out this video guide for

beginners by clicking on the link above

since its Inception back in 2015

ethereum has gone through a series of

changes and upgrades and at the time of

this video the amount of new eth

entering into circulation slows over

time so while Bitcoin is slightly

inflationary as more Bitcoin will

continue to enter into circulation until

the last Bitcoin is mined ether is

actually deflationary because less ether

will enter into circulation over time

because the more the network is used the

more ether that is burned or taken out

of circulation and if we check out this

free informative website at

ultrasound.money we can see how much eth

has been issued versus burned over time

so at the time of this video over the

past year the supply growth of eth is

negative and when we consider how supply

and demand of an asset affects its price

if the supply beef continues to go down

while demand for Eid continues to go up

with more people adopting crypto and big

traditional financial institutions

piling in the price of eth is likely

going to increase substantially over

time

bullish next let's talk about how

ethereum Network fees are calculated

what is gas gas considers the bandwidth

and space requirements as well as the

computational difficulty of each

transaction to calculate the amount of

fees it will take to complete the term

gas was created to differentiate the

cost of Performing transactions on

ethereum from the actual value of The

Ether cryptocurrency so in executing

transactions on ethereum we will see gas

prices denoted in guay which stands for

gigaway gigaway which is also referred

to as Nano ether or just Nano simply

represents a fraction of ether to the

ninth power so we can think of gateways

to ether as pennies to the US dollar

similar to how the US dollar has pennies

nickels dimes and quarters that

represent fractions of one US dollar

ether has multiple denominations of

fractional values the smallest

denomination being way here's a chart

showing all the different denominations

of ether so if we look at one giga way

of ether it's depicted as a decimal

point followed by eight zeros and a one

in the ninth place so you can see how it

would be difficult to determine how much

transaction fees will cost with all of

the decimal places so instead of a gas

price for the transaction being let's

say

0.0003 you can simply say three Giga way

and since the most common unit of ether

reflected in gas prices is gigaway

that's what denomination of ether is

used to represent gas prices so when

initiating a transaction on the ethereum

network you will see what's called a gas

limit in this field we can choose to

increase or decrease the amount of ether

we are willing to spend to complete the

transaction the more gas the faster the

transaction will be processed and if

there is not enough ether in our wallet

or account to complete the transaction

we desire we will receive an

insufficient funds for gas notification

or similar this is why it's so important

as crypto investors to be aware of

transaction fees and how they work so we

are always prepared when trans acting

and carrying out our investment and

training strategies cool moving right

along

proof of stake what is proof of stake

currently Network processes on ethereum

are completed by validators using a

proof of stake protocol which is a

consensus mechanism and a consensus

mechanism is simply a way that all

computers within a network can come to

an agreement on things like the validity

of a transaction we can see how

consensus mechanisms are a key aspect of

blockchain Technology's Foundation

because of multiple computers all around

the world are maintaining a Global

Network then a consensus mechanism that

keeps them all in agreement is extremely

crucial computers that participate in

the proof of stake consensus are known

as validators and proof of stake

requires validators to State

cryptocurrency on the network basically

as a form of collateral staking with

regard to cryptocurrency Simply means

holding cryptocurrency in a wallet or

smart contract for an extended period of

time in exchange for interest Rewards or

similar so the proof of stake algorithm

that selects which validators will

verify the next block can consider

variables like the amount of

cryptocurrency the validator has stated

on the network the amount of time the

cryptocurrency has been staked on the

network and it can randomly select

validators to ensure decentralization of

the validation process so in most cases

the more cryptocurrency a particular

validator has staked and the longer the

cryptocurrency has been staked the more

likely that validator will be selected

by the algorithm to validate blocks and

if the block the validator verifies is

approved by the rest of the network and

ultimately add it to the blockchain then

the validator earns a reward for

verifying the Block in proof of stake

people describe a newly verified block

being added to the blockchain as having

been forged by the validator as opposed

to mined by The Miner like in the case

of Bitcoin however if the block proposed

to the network has some inconsistencies

or fraudulent transactions the validator

is penalized by losing some of their

staked cryptocurrency so we can start to

see how proof of stake's virtual

verification process is much more more

energy efficient than proof of work

where computers use a lot of electricity

to compete with each other to be the

first to verify a block of data and it's

important to note that each blockchain

project that uses proof-of-stake

protocols has their own unique algorithm

with different rules and methods that

dictate their particular Network's

functionality it's interesting to know

that ethereum used to use a proof of

work protocol like Bitcoin to secure and

maintain its Network and unfortunately

since the switch to proof of stake SEC

chair Gary Gensler says proof-of-stake

assets could be Securities and as we've

been discussing on the channel it's

likely that Gensler is withholding

Clarity and crypto to allow for his Wall

Street corporate cronies to get into a

position to be the first to Market with

their ETFs and other Financial products

before finally giving green light we

shall see though let me know what you

think in the comments below cool now

that we have a basic concept of what

ethereum is in the roles ether and gas

play in the network let's get into more

detail about how the ethereum software

our platform Works how the ethereum

network works let's break down the

ethereum network into three simple

layers so that we can understand how it

works in a nutshell conceptually imagine

the base layer of ethereum consists of a

vast network of computers called nodes

these nodes are connected to the

internet with software installed on them

that runs the ethereum blockchain in

this base layer of nodes is where

transaction data is processed validated

broadcasted and stored and as these

nodes use the proof of stake protocol

required to process transaction data

they are rewarded with ether dictated by

the gas prices we discussed earlier

these rewards incentivize nodes to

maintain the ethereum network by

processing transaction data transaction

data can contain value in the form of

ether and information in the form of

code and these codes can transmit data

and Trigger actions in the next layer of

the ethereum network now imagine another

layer on top of the Base Hardware layer

that is a software layer this soft

software layer supports a programming

language library that consists of

languages like solidity Viper bamboo and

more using these computer languages

developers can write what are called

smart contracts the term smart contract

was actually coined back in 1998 by an

American Computer scientist named Nick

Zabo who invented the digital currency

called bit gold 10 years before Bitcoin

was created and smart contracts are just

lines of code that dictate the terms of

a contract and control the execution of

the contract and with the nature of

ethereum's Hardware layer in its

blockchain based software this creates

the perfect trustworthy digital

environment for building and executing

smart contracts smart contracts have the

unique ability to authorize transactions

and Carry Out terms of contracts within

a trusted environment which eliminates

the need for a central Authority like a

government bank or legal system so smart

contracts make transactions trackable

transparent and permanent amazing so we

have the hardware layer and the software

layer of ethereum which combined

basically creates a global decentralized

supercomputer known as the ethereum

virtual machine or evm in Computing

virtual machines or VMS are simulations

of computer networks that can be used

for many different cases in the case of

the ethereum virtual machine or evm a

very basic and general idea of its role

in the ecosystem is to improve

flexibility of the software and ensure

separation of each software host and

each software application and software

applications bring us to the final layer

of ethereum the application layer the

application layer is where developers

can build and launch third-party

decentralized applications or dapps for

short the applications are decentralized

because they operate on ethereum's

decentralized blockchain-based platform

popular examples of adapts that have

been created are uni swap which is a

decentralized crypto exchange and openc

an nft Marketplace and at the time of

this video a total of over 2800 adapts

are running on the ethereum network that

cover a wide range of categories

including gaming exchanges lending yield

identity property and more nice now

another popular element of the ethereum

ecosystem in dapps brings us to the next

section what are erc20 tokens you've

probably heard the term erc20b4 and

before we talk about erc20 let's talk

about what ERC means ERC is simply an

acronym that stands for ethereum request

for comments and it's similar to bip

which stands for Bitcoin Improvement

proposal so since ethereum and Bitcoin

are blockchain based Technologies there

is no one person or entity that is in

charge of deciding what new features to

add changes to make or fixes to

implement to the protocols so ERC is a

process that was created as a way for

people to contribute information about

ethereum and introduce new features to

the ethereum network ercs or ethereum

requests for comments are basically how

developers can propose improvements to

the network so the number 20 of erc20

represents the unique ID number of that

particular proposal so erc20 is a token

standard which is simply a list of rules

that any tokens issued on the ethereum

blockchain must follow so what are

tokens in the context of ethereum tokens

are types of cryptocurrencies with

different functions that represent an

asset or are intended for a specific use

that operate on the ethereum blockchain

so the ethereum ecosystem allows for the

creation deployment and circulation of

virtual currencies or tokens an erc20

proposed the implementation of rules and

regulations developers must follow when

creating tokens to issue on the ethereum

network these rules dictate how tokens

can be transferred transaction approval

methods user access to tokens and the

total Supply or number of tokens

available so erc20 basically ensures

compatibility of new tokens issued on

the ethereum network tokens that

currently run on the ethereum blockchain

are referred to as erc20 tokens

currently over 350 000 different tokens

have been issued on the ethereum network

some of the more popular erc20 tokens

include tether chain link Matic and Udi

Swap and each token has a different

function or utility for example tether

is a token that is Tethered to the US

dollar and that it maintains the same

value as the US dollar this makes the

token price stable staying at one dollar

per tether which is why tokens with this

function are called stable coins and

another example of another token with

different utility is bat bat stands for

basic attention token and it was created

to be used as the currency for a web

browsing dab called Brave that was

designed as a form of payment to be

traded between users advertisers and

Publishers in exchange for users

attention to advertisements and content

amazing so it's important to understand

as crypto investors that ethereum is

still new speculative technology that is

still in the development phase where

they constantly evolving road map

changes on the horizon are aimed at

making transactions cheaper making the

network more secure creating a better

user experience and readying the network

for future Generations so if you haven't

dipped your toes into crypto and are

interested in diversifying your

Investment Portfolio into eth you can

use the links in the description area

below to access the correct and official

sites of my recommended reputable crypto

exchanges like coinbase Kraken and more

and make sure when we are investing in

crypto we are transferring them off of

exchanges to hold in our own Cold

Storage Hardware wallets like tangent

wallet tangent wall is extremely simple

and easy to set up literally just taking

a few minutes and friends and family

I've onboarded into crypto love it there

is a wait for the next batch of wallets

so make sure to get your spawn line

earlier rather than later it looks like

a credit card uses the highest standard

of security among crypto wallets known

as eal 6 Plus which is a level of

protection used by NASA and in passports

the source code for tangem's mobile app

is all open and available for review on

GitHub which is important for full

transparency to ensure there are no back

doors built in and that funds can be

accessed if the company shut down for

any reason instead of a seed phrase as

the only way to back up our crypto

wallets backup copies of the wallet are

created and used on other tantrum cards

that we equipped with our own unique

access code we create for each card also

note the pricing for this cryptocurrency

Hardware device is much cheaper and more

affordable than other ones starting at

just over forty dollars with free

shipping using our promo code this is a

plus for any beginners just getting

started or anyone who is looking to

onboard friends and family into crypto

with a simple easy to use secure

self-custody Hardware wallet so scroll

down and use link below to access

tangent's correct and official site as

well as redeem any special offers they

have for us awesome if you would like to

finally have Eureka moment about how

crypto wallets private keys and Seed

phrases work check out this video if you

would finally like to have that Eureka

moment about how Bitcoin works and why

it can help us maintain complete control

over some of our wealth check out this

video and to get your very own tandem

wallet click on the link on the screen

like And subscribe for more be safe out

there