Ethereum is an open-source blockchain-based software platform with thousands of decentralized applications (DApps) that powers its native cryptocurrency, Ether (ETH), that can be sent and received globally without any third-party interference.
First conceptualized in 2013 by Russian-Canadian programmer Vitalik Buterin, Ethereum was designed as a platform for self-executing, permanent and immutable DApps with use cases varying from finance to gaming and art.
DApps are often referred to as smart contracts which are Ethereum transaction protocols that automatically carry out certain functions and actions like transaction processing with predetermined conditions and agreements. Sending a transaction, canceling it, or resolving a pending Ethereum transaction are actions related to the functioning of smart contracts.
What is an Ethereum transaction?
Transactions are cryptographically signed instructions from accounts.
The Ethereum network supports two main types of transactions: contract deployment transactions, the type of transaction without a receiver, and regular transactions, the simplest type of transactions used to transfer ETH from one wallet to another.
A submitted, regular Ethereum transaction includes the identifier of the sender or signature generated when the sender’s private key signs the transaction and confirms that the sender has authorized the particular Ethereum transaction. The receiving address, an amount of ETH to transfer from sender to recipient, information about Ethereum transaction fee and an optional field to include arbitrary data are all part of a submitted regular Ethereum transaction.
Ethereum transactions must be mined to become valid and require a fee from the sender.
Ethereum miners verify legitimate transactions in order to receive a reward for their work in creating new ETH. When a miner solves a cryptographic (mathematical) puzzle, a transaction is considered validated. Ethereum, like Bitcoin (BTC), has a proof-of-work (PoW) system to prevent cyber attacks from a single individual or group.
The obligation for users to pay a transaction fee when using the blockchain protects the Ethereum network from sloppy or malicious computational tasks such as users spamming the blockchain with an overload of purposeless transactions.