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Ethereum is a blockchain platform designed to build decentralized applications (dApps) using smart contracts. Ether (ETH), its native cryptocurrency, is the second largest crypto by market cap. It’s used to pay for transaction fees (gas), run dApps, and execute smart contracts. Ether also plays a key role in decentralized finance (DeFi), staking, NFTs, and decentralized exchanges.
Gas prices fluctuate based on network demand, with higher prices required during peak times to incentivize miners. EIP-1559 introduced a base fee to stabilize fees, but users can still pay a priority fee to speed up transactions.
Ethereum’s scalability problem is due to its limited transaction throughput, causing congestion and high fees. Solutions like Ethereum 2.0 upgrades, sharding, and layer 2 networks aim to improve scalability and reduce transaction costs.
Hard forks can affect users by requiring wallet upgrades and creating new coins, as with Ethereum Classic. Users must stay informed about network changes, as forks may impact their holdings or require participation in governance.
Miners validate transactions, add new blocks, and secure the network by solving complex puzzles in Ethereum’s PoW model. They are rewarded with newly minted ETH and transaction fees, but PoS will eventually replace mining in Ethereum 2.0.
The PoS transition reduces Ethereum’s energy consumption, making it more environmentally friendly. It also introduces staking rewards, which attract investors and improve network security without the high energy costs of mining.