What is Ethereum: –
It’s the second-largest cryptocurrency around but I don’t seem to wrap my head around it. Is it a revolution like Bitcoin? Can it change the world as we know it?
If you want to better understand Ethereum, but are tired of the explanations that sound like a complete gibberish technology.
Before we get into Ethereum we need to do a quick recap on Bitcoin, because it is the foundation on which Ethereum was born. By now you probably know that Bitcoin is a low-cost method, and if you still have questions about what that means or how it works, you might consider visiting another of our posts, “what is Bitcoin”.
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Before Bitcoin was invented, the only way to use digital currency was a banker or Paypal. However, the money spent was still money that was released and controlled by the government. However, Bitcoin changed all that by creating a separate currency for people who could trade directly without the need for a mediator.
Each Bitcoin transaction is verified and verified by the entire Bitcoin network. There is no single point of failure so the system is almost impossible to turn it off, use it or control it. You’re clean huh?
Now that we know that money can no longer be distributed, what other public works have been put in place today that could best benefit the land redistribution program?
What about voting?
Voting requires the central authority to count and confirm votes. Housing transfer records currently use central property registration authorities. Social networks like Facebook are based on centralized servers that control all the data we place on them.
What if we could use the technology behind: –
Bitcoin, better known as Blockchain, to distribute other items as well. The interesting thing about Blockchain technology is that it is actually a product of Bitcoin product. Blockchain technology is made by combining pre-existing technologies such as cryptography, proof of performance and network design shared together to create a system that can reach decisions without a central authority.
There was no such thing as “blockchain technology” before the introduction of Bitcoin. But when Bitcoin became a reality, people began to realize how it works and why it works and invented this “technology” blockchain technology.
Blockchain is to go to Bitcoin what the Internet should send you by email; an additional program on which to build programs and programs. Currency like Bitcoin is one of the options. So this made the people very happy, and they began to look at what else we could do to spread the people.
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However, for a system to be truly fragmented, it needs a large computer network to run it. At that time the only network available was Bitcoin and it was very limited. Bitcoin is written in what is known as the “incomplete test” language that only understands a set of small orders, such as who sent the money to whom. If you want to create a more complex program, you will need a different programming language, which means a different computer network.
Imagine for a second you were transposed into the karmic driven world of Earl Gray. You will need to understand how Bitcoin rankings work, write code that mimics the same behavior, get a large computer network to use this code over and over again and that is a lot of work. Install Ethereum.
Ethereum was first promoted in late 2013 and then revived in 2014 by Vitalik Buterin who was the founder of Bitcoin Magazine at the time. Ethereum is a Do It Yourself platform for distributed applications also known as Dapps – scalable applications. If you want to create a referral system that no one else controls, even if you have written it, all you have to do is learn the language of the Ethereum program called Solidity and start encoding.
The Ethereum platform has thousands of independent computers running on it which means it is fully enabled. Once the application has been sent to the Ethereum network these computers, also known as nodes, will ensure that they are acting as written. Ethereum is a global Dapps deployment infrastructure. It’s not money, it’s a stage. The money used to promote the network is called Ether but more on that later.
Ethereum’s goal is to overreact to the Internet.
However, is the internet connected?
I thought the Internet was already used and that anyone could start their own place. While in reality, it may be true, in practice Amazon, Google, Facebook, Netflix, and other giants control most of the World Wide Web as we know it. There is almost no work on the web that occurs without some kind of mediator or third party.
But when the concept of digital segregation is introduced by Bitcoin, many new opportunities are available. Finally, we can begin to think and design an Internet that connects users directly without the need for a third-party integrated. People can “rent” hard drive space directly from other people and make Dropbox obsolete.
Drivers can offer their services directly to passengers and remove “Uber” as a person in the middle. People can buy cryptocurrencies directly from each other without the need for an exchange that can come in by burglary or stealing your money. Ethereum allows people to communicate directly without the central authority to take care of things. It is a network of computers that combine to form a single, powerful computer.
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Okay, so now you know what Ethereum is doing but we haven’t touched on how it does yet. The encoding language Ethereum, Solidity, is used to write “Smart Contracts” which is a concept that uses Dapps.
Let me explain … In real life,
all proper contract, set of “Ifs” and “Then”. Meaning a set of conditions and actions. For example, if I pay my landlord $ 1500 on the 1st of the month and he allows me to use my apartment. That’s how smart contracts work in Ethereum. Ethereum developers record the conditions of their or Dapp program and the ethereum network uses it. They are called smart contracts because they deal with all aspects of the contract – enforcement, management, operation, and payment.
For example, if I have a smart contract used to pay rent, the landlord does not have to actively raise money. The contract itself “knows” when the money is sent. If I had actually sent the money, then I would have been able to open the door of my apartment. If I miss my payment, I will be locked out.
However smart contracts also have their downsides. Going back to my previous example, instead of evicting an unpaid employer, a “smart” contractor will lock up an unpaid employer outside their home. A truly wise contract, on the other hand, may also consider other factors and, such as the underlying circumstances, the spirit in which the contract was written and will be able to do otherwise. In other words, he could have served as a very good judge. Instead, the “smart contract” in the Ethereum context is not smart at all.
It is actually a solid book without compromise. It follows the rules as far as T and cannot take any second consideration or “spirit” of the law to look at it as it often does with real-world treaties. Once a smart contract is used on an Ethereum network, it cannot be edited or edited, even by its original author. It does not change. The only way to change this contract would be to convince the entire Ethereum network that a change had to be made and that would probably not be possible.
This creates a much bigger problem as unlike Bitcoin, Ethereum is built on the ability to create really complex contracts, and complex contracts are very difficult to find. With any contract, the more complex it is, the harder it is to enforce as there is more room left for the translation, or more phrases should be written to deal with emergencies. With smart contracts, security means complete management with all possible contractual means to ensure that the contract does only what the author intended. Ethereum introduced the concept of “code is legal”.
That is, the contract at Ethereum is the ultimate authority and no one can break the contract. Yes, all of that came to a standstill when the DAO event took place. DAO raised $ 150M in Ethereum, ether, while ether was selling for about $ 20.
While all of this sounded great, the code was not well protected and led to someone finding a way to get rid of the DAO without money. Now don’t say that the person who issued the DAO was a “hacker”.
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But some would argue that this was just someone who took advantage of the opportunities he was getting from a smart DAO contract. This is not much different from a clever lawyer who thinks there is a problem in the current law affecting the good results of his client. What happened next was that the Ethereum community decided that the code was no longer legal and they changed the Ethereum rules to recover all the money that went into the DAO.
In other words, contractors and investors have done something stupid and the developers of Ethereum decided to release them on bail. A few minorities who disagree with this move stick to the original Ethereum Blockchain before its contract was changed and that’s how Ethereum Classic was born, which is actually the real Ethereum.
We’ve covered a lot so far and the last thing I want to talk about is Ethereum as money. We have already discovered that Ethereum is basically a large group of computers that work together as one big computer to create Dapps-enabled code. But this does require money – Money to get equipment, install it, store it and cool it if needed. That is why Ether was founded. When people talk about the price of Ethereum they are actually referring to Ether – money that encourages people to use the Ethereum protocol on their computer.
This is very similar to the way Bitcoin miners are paid by keeping the Bitcoin blockchain. In order to post a smart contract on the Ethereum platform, its author must pay to do so. That payment is made as ether. This is done so that people will write a well-prepared and efficient code and will not waste Ethereum network computing on unnecessary tasks. Ether began distribution at the first Ethereum Coin launch in 2014. Back then it cost about 40 cents to buy one Ether.
Today, Ether One has a significant dollar value since Ethereum network usage has grown significantly due to the ICO hype that began in 2017. Still, confused? Don’t worry; we will go deeper into Ether and mining in the next article.