Despite the fact that alcohol has been used and misused for hundreds of years, the mechanism of action of this simple molecule remains the subject of study. Alcohol use results in diverse behavioral effects, including intoxication, cognitive impairment, motor incoordination, tolerance and dependence, and these effects are likely due to its actions on multiple brain proteins.
Determining the precise molecular target of a psychoactive drug is notoriously difficult and for few drugs has this been more challenging than for ethanol. Considering that ethanol is the most widely used drug in society and that ethanol abuse is by far the most common form of substance abuse, understanding where and how this compound acts in the brain is one of the key challenges of neuroscience.
Source: Alcohol. 2007 May; 41(3): 211221.
Although it has been established that alcohol strongly affects the functioning of the Central Nervous System (CNS), identifying the biochemical pathways has been problematic. Unlike many other psychologically active chemicals, no 'binding sites' for alcohol have been found. It's theorised that it affects the CNS's GABAa receptors, but experimental evidence is unclear :
[…] there are reports spanning more than 30 years of literature showing that moderate (330 mM) concentrations of ethanol enhance GABAergic neurotransmission. However, there are also many reports showing no effect of moderate or even large concentrations of ethanol in vivo and in vitro.
Source: Pharmacol Biochem Behav. 2008 Jul; 90(1): 9094.
Irrespective of whether or not alcohol affects GABAA receptors, its very well-known physical and mental effects are yet to be fully explained.
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