How does Ethereum works?

Considered a worldwide supercomputer, Ethereum gives people an ability to rent CPU time.  Ethereum uses a consensus mechanism that allows the transactions that occur on the network to be trusted, and that is the reason why it works. The consensus mechanism that Ethereum uses is called Proof of Work, which is the same mechanism that the BTC network uses.

To be able to interact with the Ethereum network and send a transaction to be processed, a small transaction fee is needed to be paid. This transaction fee is referred to as GAS. The gas allows for the computers that will be processing your transaction to be compensated proportionately to the amount of CPU time that will be used.

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The smart contracts range from being a custom token to a decentralized application (dApps). Any interaction with these smart contracts needs the user to allow the transaction, making Ethereum a well refined and secure network to use for numerous purposes.

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