What is ethereum?

If you have never heard about ethereum or you ignore what it can be used for; this guide is perfect for you. Actually, ethereum is a platform on which can build unstoppable and decentralized applications. In another way or simply put, Ethereum is a decentralized system, which means it is not controlled by any single governing entity.

UNDERSTANDING ETHEREUM

Ethereum is considered as the most promising blockchain outside Bitcoin. Its creator sees it as the first global computer, which makes it possible to build on it, many platforms decentralized applications.

 

Actually, when a system is centralized; it means that there is an entity which controls it, but it also means a single point of failure, which makes applications and online-servers utilizing this system extremely vulnerable to hacker attacks and even power outages. Moreover, most social networks and other online servers require users to provide at least some degree of personal information, which is then stored on their servers. From there, it can be easily stolen by the company itself, its rogue workers or hackers.

Ethereum took the technology behind Bitcoin and substantially expanded its capabilities. It is a whole network, with its own Internet browser, coding language and payment system. Most importantly, it enables users to create decentralized applications on Ethereum’s Blockchain.In the other hand, ethereum is a decentralized system, which is fully autonomous and is not controlled by anyone at all. Ethereum is a decentralized system, which means it utilizes a peer-to-peer approach. Every single interaction happens between and is supported only by the users taking part in it, with no controlling authority being involved.

Those applications can either be entirely new ideas or decentralized reworks of already existing concepts. This essentially cuts out the middleman and all the expenses associated with the involvement of a third party. For example, the only profit that comes from users ‘liking’ and ‘sharing’ their favorite musician’s posts on Facebook is generated from an advertisement placed on their page and it goes directly to Facebook. In an Ethereum version of such social network, both the artists and the audience would receive awards for positive communication and support. Finally, Ethereum-based applications will remove all sorts of payments to third parties for fascinating any kind of services.

In short, Ethereum is a public, open-source, Blockchain-based distributed software platform that allows developers to build and deploy decentralized applications. The entire Ethereum system is supported by a global system of so-called ‘nodes.’ Nodes are volunteers who download the entire Ethereum’s Blockchain to their desktops and fully enforce all the consensus rules of the system, keeping the network honest and receiving rewards in return.

Who invented Ethereum 

Everyone knows that Bitcoin is the first virtual currency launched on the market. But that’s not all, because this currency has also allowed many developers to create others. This is the case of Ethereum whose history and development have been influenced by those of Bitcoin.

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The real creator is Vitalik Buterin. This is a young developer who was interested in Bitcoin and who was part of the forum on the project Invictus. In 2011, when he was only 17 years old, the young man discovered the existence of Bitcoin through his father. Immediately, he started being interested in this technology, then he quickly understood the potential of the cryptocurrency market but more specifically blockchain as a whole. After discussing with many developers around the world, he proposed his concept by publishing the Ethereum white paper in 2013.

In early 2014, at the North American Conference, he officially announced the Ethereum and he began collaborating with Dr. Gavin Wood to set up the platform. He even left his university to devote himself totally to the Ethereum. Throughout the year, Vitalik and his team have worked hard: presale of the first Ethers for the fundraising, different meetings . Finally, the Ethereum platform is commissioned in 2015. Then in July of the same year, the developers started to create smart contracts and decentralized applications. Many changes have been made and major companies such as Intel, Microsoft, Bp, have joined the Ethereum, including the Enterprise Ethereum Alliance. So far, the platform’s system is constantly being revised and refined to ensure its efficiency and safety.

Is it a cryptocurrency? 

By definition, Ethereum is a software platform that aims to act as a decentralized Internet as well as a decentralized app store. A system like this needs a currency to pay for the computational resources required to run an application or a program. This is where ‘Ether’ comes into play.

Ether is a digital bearer asset and it doesn’t require a third party to process the payment. However, it doesn’t only operate as a digital currency, it also acts as ‘fuel’ for the decentralized apps within the network. If a user wants to change something in one of the apps within Ethereum, they need to pay a transaction fee so that the network can process the change.

The transaction fees are automatically calculated based on how much ‘gas’ an action requires. The amount of required fuel is calculated based on how much computing power is necessary and how long it will take to run.

Ethereum VS Bitcoin

“The Bitcoin blockchain has been designed specifically for monetary applications, while Ethereum can create any type of application,” says Ethereum founder Vitalik Buterin.

Ethereum operates in a similar way to the Bitcoin network, in that it allows users to send and receive tokens that represent value over an open network. However, the primary aim of Ethereum is not to act as a form of money, but to operate smart contracts. The reality is that they are two completely different projects with completely different goals. While Bitcoin has established itself as a relatively stable and the most successful cryptocurrency to date, Ethereum is a multipurpose platform with its digital currency Ether being just a component of its smart contract applications.

Actually, Ethereum has a different computer code from bitcoin: it is rather two different uses and complementary blockchains technologies. Note the existence of ideological differences between the two communities that surround them: that of Bitcoin is more of libertarian inspiration, centered on the monetary domain, while that of Ethereum aims more to create a new web, decentralized, rather than a new currency.

Microsoft also justifies its choice to use Ethereum for its Azure platform: “While Bitcoin has many interesting uses as cryptocurrency, Ethereum provides the flexibility that many of our customers are looking for. Ethereum has a vibrant community of developers, enthusiastic and open to business applications. ”

In practice, participants in the Ethereum network do not just validate monetary transactions: they execute code from decentralized applications, called “Dapps”.

Ethereum works with a cryptocurrency, ether, which has a specific function: pay the execution of smart contracts, whose operation can consume significant resources. Furthemore, the ether is used in order to buy “gas” to make these contracts work; if you run out of gas, the contract stops.

Ethereum operates in a similar way to the Bitcoin network, in that it allows users to send and receive tokens that represent value over an open network. However, the primary aim of Ethereum is not to act as a form of money, but to operate smart contracts.