What is Ethereum and smart contracts? How to operate in ETH token?
Ethereum is essentially a Blockchain based cryptocurrency. It ranks 2 in the list of all cryptos owing to its $20.8 billion market capitalization. (referCoinSwitch for Live ETH BTCChart). It serves the purpose similar to that of Bitcoin i.e. to be used as a mode of payment. But wait, it is not the only utility of Ethereum. Ethereum was not developed to be primarily used as a mode payment, rather it introduced the concept of smart contracts powered by Blockchain technology. Lets us have a clear understanding of each of these terms.
What is Blockchain?
In simple terms, Blockchain is a decentralized distributed ledger. There are certain important keywords like Decentralized, distributed, database and ledger used in defining a Blockchain.Decentralization in layman term means that the application or service continues to be available and usable even if a server or a group of servers on a network crashes or are not available. Distributed means that any server or node on a network is connected to every other node on the network directly or indirectly. Database refers to location for storing durable data that can be accessed at any point in time. Ledger is an accounting term and think of it as specialized storage and retrieval of data.
What are Ethereum Smart Contracts?
Ethereum by writing custom business functionality into it. These smart contracts can be executed as part of transaction and it follows the process of mining as discussed earlier.
A person bearing an account on ETH network can send a message for transfer of Ether from his account to another or he can send a message to invoke a scheduled activity within a contract. Ethereum is not programmed to distinguish these acts as far as transactions are considered. The only thing to ensure is that transaction must be digitally signed by an account holder’s private key. This is done to ensure that identity of sender can be established while verifying the transaction and changing balances of multiple accounts.
What are the Operations available in Ethereum?
Ethereum token are always available at the participating crypto exchanges. You can buy Ethereum with credit card or any other fiat currency. Other than that, there are three types of operations available in Ethereum network.
1. Transactions in ETH tokens can be of four types which relates to transfer of Ether from one account to another. The accounts can be outside owned accounts or contract account. Below mentioned are the possible cases of transactions:
a. An outside owned account sends Ether to another outside owned account in a transaction.
b. An outside owned account sends Ether to a contract account in a transaction.
c. A contract account send Ether to another contract account in a transaction.
d. A contract account send Ether to an outside owned account in a transaction
2. Another operation in ETH network is the deployment of smart contracts. An outside owned account can deploy a contract using a transaction in Ethereum virtual machine.
3. After deployment of the contract in Ethereum virtual machine, the next utility arises for the using or invoking a function within a contract. Performing a function in a contract that changes the completeness level (state) of the contract are considered as transactions in Ethereum. If performing a function does not change the state, it does not require a transaction.