Ethereum: Understand the limitation of negative sales
As a Bitcoin enthusiast, it is natural to wonder about the underlying mechanisms of cryptocurrency. In this article, we will immerse ourselves in the concept of negative sales in Etherum and explore what prevents them from happening.
** What is a negative balance?
In the context of digital currencies like Bitcoin and Ethereum, a negative balance refers to the situation where an account has more ethers (ETH) or other assets that it cannot spend. When this happens, the balance of the user becomes « negative ». In theory, if you have $ 100 ETH and you try to spend $ 101, your wallet will show that you now need $ 1, which is not possible in most cases.
** Why does Ethereum prevent negative sales?
Ethereum has implemented several measures to prevent negative sales. One of the main reasons is the concept of « gas », which is a unit of measurement for calculation resources (think about it as the rental of computer time). Gas is used to pay transactions and network fees. When you spend ETH, transaction costs and gas consultation are deducted from your balance.
In the Solidey of Ethereum programming language, gas costs are calculated according to the call of the function of the contract, which includes the quantity spent and the gas limit fixed by the developer. If a user tries to spend more eTH than his balance available for transactions (that is, he does not have enough gas), the transaction will be rejected.
Another reason is that Etherum’s Blockchain architecture is designed to prevent negative sales at the account, rather than transactions or individual assets. When you create an Ethereum portfolio, it includes a certain amount of funds, which are used as a buffer in case someone is trying to spend more eT than available. This « buffer » guarantees that even if several users try to simultaneously spend excessive quantities of funds, the transaction will be rejected.
** What about derivatives and loan platforms?
Although the negative sales themselves are generally not a problem for individual users, there are scenarios where they could arise:
- Derivatives:
Derivative contracts allow traders to bet on price movements, outside of complex mathematical models. If a user has large amounts of ETH in these derivatives, his balance will be attached and will potentially become negative if the prices of the contract move them again.
- Loan platforms:
Some loan platforms use Ethereum as a guarantees of guarantees or liquidity for other assets. If the balance of a lender becomes negative due to withdrawals, this can cause difficulties in recovering the funds.
Conclusion
Understanding what prevents negative sales in Ethereum is essential for anyone interested in investing, negotiating or using these cryptocurrencies. By entering the underlying mechanisms and constraints on account sales, you can better navigate in the complexities of the digital currency markets. Remember that although the negative sales themselves are generally not a problem for individual users, derivatives and loan platforms may require specializations.
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