Do you want to know what Ethereum is & its benefits, and what it can be used for, this guide is perfect for you!
Important Note: If you’re unfamiliar with blockchain technology, check out step by step introduction for blockchain technology beginners guide here.
What is Ethereum?
Ethereum is an open-source platform, based on blockchain technology, allowing software developers to build smart contracts and decentralized applications & it supports the latest & modified version of Nakamoto consensus via transaction-based state transitions.
Ethereum was created in 2014 by lead-developer Vitalik Buterin and is now the second most valuable coin in the cryptocurrency industry.
Ethereum and Ether
People generally use the terms Ethereum and Ether mutually. However, they are different.
Ethereum is the smart contract network, although Ether is the token or coin needed to fuel it. With many latest technologies and names, most people call both "Ethereum" and use the currency code ETH.
Benefits of Ethereum?
Ethereum platform benefits from all the properties of the Blockchain technology that it runs on. It completely ignores any third party interference, which means that all the decentralized applications developed within the network can’t be controlled by the third party at all.
Multiple Blockchain networks is formed around a basis of unity, meaning that all the nodes within the platform need to agree on the single change made within it. This gets rid of possibilities of fraud, corruption and makes the network very secured.
The whole network is decentralized, which means there is no way single point of failure. So, all the apps will always stay online and never go offline. Moreover, the decentralized terms and cryptographic security make the Ethereum platform well protected against possible of hacking attacks and criminal activities.
What is the difference between Bitcoin and Ethereum?
Like Bitcoin, Ethereum is a distributed public blockchain platform. Although there are some important technical differences between the both like :
Bitcoin and Ethereum differ considerably in purpose and capability. Where Bitcoin stores a list of balances and transactions on its blockchain, the Ethereum blockchain is designed to store different types of data. This data can be accessed and used by computer programs running on the Ethereum blockchain. These programs are called decentralized apps, or dApps.
What can Ethereum be used for?
Ethereum allows developers to build and deploy decentralized apps. Decentralized applications or Dapp serve some particular benefits to its users.
For example, is a Dapp that offers its users with a P2P electronic cash system that allows online cryptocurrency payments. Because decentralized applications are made up of programming code that runs on a blockchain technology, they are not controlled by any individual or third party.
Ethereum can also be used to develop Decentralized Autonomous Organizations (DAO). A DAO is fully uncontrolled, decentralized organization with no single leader. DAO’s are run by the programming language, on a collection of smart contracts written on the Ethereum blockchain network. The programming code is designed to replace the rules and structure of a traditional enterprise, ignoring the need for people and centralized approach. A DAO is owned by everyone who purchases tokens, but alternately of each token holding to equal shares & ownership, tokens act as contributions that give folks voting rights.
Ethereum is also used as a platform to launch other cryptocurrencies. being of the ERC20 token standard described by the Ethereum network, other developers can issue their own token and raise funds with an initial coin offering (ICO). In this fundraising approach, the issuers of the token set an amount they want to raise, provide it in a crowd-sale, and receive Ether in exchange. Billions of dollars have been raised by ICO's on the Ethereum network in the past years, and one of the most valuable & profitable cryptocurrencies in the world, EOS, is an ERC20 token.
Ethereum has recently launched a new standard called the ERC721 token for tracking unique digital equity. One of the biggest use cases currently for such tokens is digital collectibles, as the base allows people to prove ownership of scarce digital goods. Many online games are currently being built using this Ethereum technology, such as the overnight hit online game is CryptoKitties, here you can collect and breed digital cats.
What is a smart contract?
A smart contract is an agreement between two parties in the form of computer code. They run on the blockchain technology, so they are stored on a public ledger and cannot be changed. The online transactions that happen in a smart contract processed by the blockchain technology, which means they can be sent automatically without a middleman. The online transactions only happen when the conditions in the agreement are met there is no middleman, so there are no issues with trust.
check out deeply about What is Smart Contract & It's benefits here!
Ethereum and the future
Ethereum is full of possibilities. It may have the power to disrupt different industries, with new innovation ideas developing all the time. Ethereum is not just a cryptocurrency, but it’s base for smart contracts, crowdfunding, and other potential applications, offering that was previously unavailable in the marketplace. Together, these aspects give Ethereum the significance that long-term success will be in order.
Ethereum’s developers are working with programming code that other blockchain technologies shortage, and that’s the dynamic ability to build other cryptocurrencies off of the Ethereum blockchain network. ICO’s are validated by the Ethereum blockchain platform, meaning without Ethereum other tokens cannot exist. This positions Ethereum to become one of the largest cryptocurrency platforms in the world.
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