What is Ethereum?

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聽聽聽聽聽聽聽聽聽What is Ethereum?

聽聽聽聽聽聽聽聽聽Understanding what Ethereum is for beginners.

聽聽聽聽聽聽聽聽聽Who is the inventor and what inspired him to create ethereum.

聽聽聽聽聽聽聽聽聽Technology behind Ethereum.

聽聽聽聽聽聽聽聽聽What ethereum is used for and how does it work?

聽聽聽聽聽聽聽聽聽What are the benefits of Ethereum decentralized Platform?

聽聽聽聽聽聽聽聽What鈥檚 the drawback of decentralized applications?

聽聽聽聽聽聽聽聽I want to develop an app. How do I access Ethereum?

聽聽聽聽聽聽聽聽What apps are currently being developed on Ethereum blockchain?

聽聽聽聽聽聽聽聽聽An Ethereum fork

聽聽聽聽聽聽聽聽聽The future of Ethereum.

What Is Ethereum?

Vitalik Buterin in 2015 made a cryptocurrency called Ethereum. 聽Ethereum is聽a public blockchain-based platform inspired by the Bitcoin platform.聽One of the main differences of Ethereum from bitcoin is that it has entirely different blockchain.

Ether uses aProof-of-Work聽(PoW)system. Proof-of-work (PoW) requires solving algorithmically聽challenging puzzles andminers work to earn Ether, a type of crypto token that fuels the network.On the other hand,Bitcoin offers one particular application of blockchain technology, a peer to peer digital cash system used for online Bitcoin payments.

Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.聽

Gas is used to pay miners fees for including transactions in their block, and every smart contract execution requires a certain amount of gas to be sent along with it to lure miners to put it in the blockchain.
Another innovation that Ethereum introduced is the concept of smart聽contracts. Smart contracts are programs that live on the Ethereum network聽that can be used to verify conditions for trades and to act as an escrow聽for both parties in a transaction.聽

What this means is that instead of introducing more risk into a trade or聽sale by adding a third party (which would be an authoritative source).聽What鈥檚 groundbreaking about this innovation, is that the smart contracts聽can also hold the Ethereum within itself and distribute payments at a set聽time, or once all conditions are met.聽

This becomes useful for plans of insurance, for secure company payments,聽and even as a way to create an inheritance for generations to come.聽

Smart contracts are fuelled by gas, which you can pay in tiny fractions of聽ether. Depending on how busy the Ethereum network is with transactions,聽the price of gas that you decide to send with your purchase will determine聽how quickly your transaction will be validated.聽

The other insight into Ethereum was theERC20 contract. It created a method聽for hundreds of tokens, which use the Ethereum network, but act as branded聽coins with their values to emerge.聽Many of the top altcoins in the crypto verse are ERC20, while the amount of聽Proof of Work or Bitcoin-based cryptocurrency variants has declined over聽time.聽

Understanding what Ethereum is for beginners.

Ethereum is not just a cryptocurrency, is a blockchain of its own where other applications are built on called DAPPS (Decentralized applications.). For a clear understanding, we will use real cases to explain this.

聽What would you do with your iPhone if Apple had not put聽an operating system on it? And what be the purpose of that operating聽system if there were no applications? This is the essence of ethereum.聽
The blockchain and the miners which support it are like your iPhone.聽Ethereum is like iOS. And the actual applications that you use every day聽are called 鈥淒APPs鈥. This is short for Decentralized Applications, and聽basically encompasses all of the interactions that you will have with聽the platform. For all intents and purposes, you can think of a DAPP as聽the same thing as a smart contract, although technically a smart聽contract is just one piece of a DAPP.聽

Of course, there are differences as well. Nobody actually goes out and聽buys an ethereum blockchain at the Apple store. Instead, it is a pay as聽you go system. When you run a program or DAPP on ethereum, you pay for聽the cycles and storage you use in a currency called gas. The price of聽gas fluctuates just like it does in the real world. It is priced high聽when the computer is very busy and falls when demand drops. This is why聽you need an ethereum wallet. It holds the gas that must pay when you use聽ethereum resources.聽

What kinds of DAPPs have people written for ethereum? Pretty much聽anything you can think of at this point. There are well over a million聽accounts on Etherscan.io that all have some kind of interaction with a聽smart contract. Just imagine what kind of things you do with your聽smartphone. Now consider all of the institutions you trust with your聽personal data or your financial information when you use that service.聽
All of these types of applications are candidates for being聽decentralized and implemented on ethereum instead.聽

So next time, when you hear people talking about ethereum and wondering聽what that actually is, just remember the immortal words of
Forrest Gumpregarding Apple.鈥淗e got me invested in some kind of fruit company.鈥澛That is really all you need to know.聽

Who is the inventor and what inspired him to create Ethereum.

Vitalik Buterin is the inventor of Ethereum.聽 Vitalik was inspired by bitcoin but due to the difficulties experienced聽 by developers on the bitcoin-blockchain network, Vitalik created ethereum to solve this predicament.

Prior to the creation of Ethereum, bitcoin-blockchain applications were made to do extremely constrained tasks like to act as peer-to-peer digital currencies.

Developers confronted an issue. Either extend the functions offered by Bitcoin and different sorts of applications, which is extremely confused and tedious, or build up another blockchain application and a totally new platform too. Due to this problem associated with bitcoin blockchain network, 聽Ethereum's creator, Vitalik Buterin built up another methodology to curb this problem.

Here the creator stated.

鈥淚 thought [those in the Bitcoin community] weren鈥檛 approaching the problem in the right way. I thought they were going after individual applications; they were trying to kind of explicitly support each [use case] in a sort of Swiss Army knife protocol.鈥澛Vitalik Buterin, inventor of Ethereum.

The technology behind Ethereum.

According to Wikipedia, Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract

(scripting) functionality. It supports a modified version of Nakamoto consensus via transaction-based state transitions..

What is Ethereum used for and How does it work.

As we stated earlier, ethereum isn't just a cryptocurrency, is a blockchain where Dapps are built on. Using ethereum, the app聽doesn鈥檛 require one to censor its data. To accomplish this, ethereum borrows from bitcoin鈥檚 protocol and its blockchain design but modified it to support applications called DAPPS beyond just peer-to-peer cryptocurrency.

Ethereum helps developers to build and deploy decentralized applications to ethereum network. Dapp serves some particular purposes to its users. For instance, bitcoin is a Dapp that provides its users with a peer-to-peer digital cash system that enables online Bitcoin payments or generally any financial transaction thereby eliminating third-party intermediary. Because decentralized applications are made up of code that runs on a blockchain network, they are not censored by any central authority nor individual.

Ethereum came about so that developers can create applications or agreements that have additional steps, rules of ownership, alternative transaction formats or different ways to transact.

The goal of ethereum blockchain is to allow developers to write more programs in which blockchain transactions could govern and automate specific outcomes.

Generally, Ethereum makes any centralized services become decentralized. Ethereum can also be used to build Decentralized Autonomous Organizations (DAO). A DAO is fully autonomous, decentralized organization with no single leader.聽

鈥淎 DAO consists of one or more contracts and could be funded by a group of like-minded individuals. A DAO operates completely transparently and completely independently of any human intervention, including its original creators. A DAO will stay on the network as long as it covers its survival costs and provides a useful service to its customer base鈥 Stephen Tual, Slock.it Founder, former CCO Ethereum.

What are the benefits of Ethereum decentralized Platform?

Since decentralized applications run on the public blockchain, they benefit from all of its usefulness.

Immutability聽鈥 No third party can make changes to data.

Zero downtime鈥 Apps never go down nor go off.

Incorruptible聽 鈥 Apps are based on a network formed around the principle of consensus i.e each must check and agree that it's coming from the verified network, thereby making censorship impossible.

Secure鈥 It's secured using cryptography and no point of failure, applications are well protected against hacking attacks and fraudulent activities.

What鈥檚 the drawback of decentralized applications?

Regardless of the advantages of ethereum blockchain, decentralized applications aren't impeccable. since smart contract codes is written by humans, they are prone to mistakes in code. Code bugs can lead to unfriendly adverse actions being taken. If any mistake in the code gets exploited, there is no efficient way in which an attack can be stopped other than obtaining a network consensus and rewriting the underlying code. This goes against the essence of the blockchain which is meant to be immutable. Additionally, any action was taken by a central authority, then the decentralized nature of an application will be questionable.

I want to develop an app. How do I access Ethereum?

There are numerous ways you can connect to the Ethereum network, one of the simplest routes is to utilize its native Mist browser. Mist provides a user-friendly interface & digital wallet for users to trade & store Ether as well as write, manage, deploy and use smart contracts. Like web browsers give access and help people navigate the internet, Mist provides a portal into the world of decentralized blockchain applications.

There is also the MetaMask browser extension, which turns Google Chrome into an Ethereum browser. MetaMask allows anyone to easily run or develop decentralized applications from their browser.

Read a complete guide on how to develop an app on ethereum;

https://hackernoon.com/getting-started-as-an-ethereum-web-developer-9a2a4ab47baf

What apps are currently being developed on Ethereum blockchain?

The Ethereum platform is being utilized to make applications over an expansive scope of administrations and enterprises.聽 In any case, developers are in the uncharted area, so it's difficult to know which applications will succeed and which ones will fail. Here are a few exciting projects being executed on the ethereum-blockchain network.

Liquineqis an Ethereum-based financial software solution to be used by聽banks and other financial institutions. It enables real-time, peer-to-peer聽value exchange and payment services across borders and other silos, and聽between fiat money, other asset classes, and decentralized currencies. It鈥檚聽designed to enable financial inclusion and partnering with existing banking聽institutions, access will be made available to everyone via the Liquineq聽network.聽

Auguris聽an聽open-source聽prediction market platform聽that enables聽anyone to forecast events聽and obtain rewarded for predicting them聽accurately.

Bitcademyis a great example, where sports meets blockchain - and real academies meet virtual marketplace. The project is aimed to support underdeveloped communities and young athletes and decentralizes whole industry by connecting football fans and allowing them to sponsor young players.

ShelterZoomis the first real estate technology company that has successfully delivered a blockchain-based real estate offer and acceptance platform. The platform allows sellers, buyers and their realtor representative to see all of the offers and transactions at the same time and in real time. Blockchain's use in smart contracts, which automatically executes a transaction once parties have agreed on its conditions solves the confirmation and verification process.Read about how blockchain can be used in land registry.

An Ethereum fork

We will look into the case of DAO attack which was one of the reasons that led to Ethereum fork.聽You remember that I stated how Ethereum can be utilized to develop Decentralized Autonomous Organizations like DAO? Well in 2016, An issue arose. A start-up working on one particular DOA project, named 鈥楾he DAO鈥 got hacked. Having raised $150 million in a token sale, an unknown attacker made away with $50 million.聽 The attack was made as a result of a technical flaw in The DAO software, not the Ethereum platform itself. As a result of this issue, the developers and founders of Ethereum took it upon themselves to were to deal with it.

The DAO聽was a project developed by a team behind another start-up called Slock.it. Their aim was to build a human less venture capital firm that would allow investors to make decisions through smart contracts.

As a result of these issues, there came a forum discussion where the Ethereumcommunity voted and聽decided聽to retrieve the聽stolen聽funds by聽executing what鈥檚聽called聽a hard聽fork or a rewriting of code. The聽hard聽fork聽moved聽the聽stolen聽funds to聽a new聽smart contract designed to let聽the original聽owners聽withdraw their tokens. But these decision made things get more complicated since Ethereum blockchain protocols are designed to make all transactions irreversible and immutable which is the main essence of blockchain. Apply hard fork will endanger the essence of blockchain and ultimately lose its main value.

This led to a less aggressive solution called soft fork, the Ethereum community and its founders were placed in a threatening position. using a hard fork or soft fork has its flaws and the community are of different opinion. If they didn鈥檛 retrieve the stolen investor money, ether could lose its trust. On the other hand, applying hard fork as a way of recovering investor money will make ether lose its value.

Eventually, the majority of the Ethereum community voted to apply a hard fork, and retrieve The DAO investors funds being stolen. But many disagreed with this decision.聽This led to a split where two parallel blockchains now exist. For those group of people who blatantly disagree with any changes to the blockchain even when hacking occurs there isEthereum classic.while those who agreed to rewrite a small part of the blockchain and return the stolen money to their owners, there isEthereum.

The future of Ethereum.

Despite all the flaws, Ethereum is heading forward and has more value compared to others. By providing a user-friendly platform that enables people to harness the power of blockchain technology, Ethereum is speeding up the decentralization of the world economy. Decentralized applications have the potential to revolutionalize how we conduct our everyday business in all the sectors.

聽 聽READ MORE ON;

聽 聽What is blockchain? Broad overview

聽 聽Asset-backed token

聽 聽Blockchain security problems & solution

聽 聽Best cryptocurrency exchange in Nigeria

聽聽The negative impact of blockchain technology

聽 Case: Use of blockchain in the land registry

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Category:Crypto

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