Innovations in Blockchain technology led to the development of a new platform called Ethereum. Like Bitcoin, Ethereum is also a distributed network. Rightly termed as Blockchain 2.0, it paved a path for developers to contribute to the blockchain community. This blog on ” What is Ethereum ” will enrich your knowledge on Ethereum.
Following are the topics I’ve covered in this blog:
- What Is Ethereum?
- Smart Contracts
- Ethereum Cryptocurrency
- Ethereum Virtual Machine (E.V.M.)
- Decentralized Applications (DApps)
- Decentralized Autonomous Organization (DAO)
- What is Being Built on Ethereum?
- What will Ethereum be Used For?
Ethereum is the second major innovation in Blockchain since the invention of Bitcoin.
While Bitcoin can be described as a digital money.
Ethereum is a decentralized platform for programming a digital money.
Although Bitcoin and Ethereum are powered by the distributed ledgers, the two differ in many technical ways, let me help you in comprehending the differences between the two.
Bitcoin vs Ethereum
|Concept||Digital Money||World Computer|
|Founder||Satoshi Nakamoto(Mysterious)||Vitalik Buterin & Team|
|Scripting Language||Turing Incomplete||Turing Complete|
|Release Date||Jan 2009||July 2015|
|Coin Release Method||Early Mining||Through ICO|
|Average Block Time||~10 minutes||~12-15 seconds|
|Purpose||Alternative to Regular Money||Peer to peer Contracts|
Both Bitcoin and Ethereum are often compared to each other, but, the two were designed with different vision and goals. Bitcoin is an established cryptocurrency used for trading, Ethereum is a multipurpose platform with its digital currency as the fuel for smart contracts functionality.
But what is Ethereum and what future does it hold for our society, here’s a run-through.
What Is Ethereum?
Ethereum is an open-source & public blockchain based distributed computing platform for building decentralized applications.
So, Before the creation of Ethereum, blockchain applications were designed to do a very limited set of operations. Bitcoin and other cryptocurrencies, for example, were developed exclusively to operate as peer-to-peer digital currencies.
Vitalik Buterin envisioned Ethereum as a platform for developers to write programs on the blockchain. To accomplish his goal he used similar Blockchain designs & protocols as that of Bitcoin’s and improvised it to support applications beyond currency issuance.
Anyone across the globe can connect with Ethereum blockchain to develop a program and can maintain the current state of the network, hence the term “World Computer”.
What is Ethereum | Smart Contracts and Ethereum Explained | Edureka
It can basically create a programmable contract directly between peers.
A contract that self-executes, and handles the enforcement, the management, performance, & payment.
Simply put, it can be defined as a contract that self-executes, and handles the enforcement, the management, performance, & payment.
Ethereum runs on its native token called which serves two main purposes:
- Ether payment is required for applications to perform any operation so that broken and malicious programs are kept under control
- Ether is rewarded as an incentive to the miners who contribute to the Ethereum network with their resources- much like bitcoin’s structure.
Every time a contract is executed, Ethereum consumes token which is termed as ‘gas’ to run the computations.
Gas in Ethereum
Gas is required to be paid for every operation performed on the Ethereum blockchain.
Its price is expressed in ether and it’s decided by the miners, which can refuse to process the transaction with less than a certain gas price.
Ethereum Virtual Machine (E.V.M.)
- The Ethereum virtual machine is the engine in which transaction code gets executed
- E.V.M. enables the development of potentially thousands of different applications all on one platform
- Contracts written in a smart contract-specific programming language are compiled into ‘bytecode’, which an EVM can read and execute
It actually handles the internal state and computation in Ethereum. Practically, EVM can be thought of as a large decentralized computer with millions of objects called “accounts” which have the ability to maintain an internal database, execute code and also they can talk to each other.
With EVM at its heart, Ethereum enables the development of potentially thousands of unstoppable applications.
Wondering what can be built on Ethereum? Well, Ethereum can be used to build some really cool applications called DApps.
Decentralized Applications (DApps)
- DApps are computer applications that operate over a blockchain enabling direct interaction between end users and providers
- It can be comprised of single DAO or even a series of DAO that work together to create an application
A user may need to exchange Ether as a way to settle a contract with another user, using the network’s distributed computer nodes as a way to facilitate the distribution of this data.
Ethereum also allows the user to build decentralized organizations.
Decentralized Autonomous Organization (DAO)
- DAO are organizations that exist entirely on a blockchain and are governed by its protocols
- It is designed to hold onto assets and use a kind of voting system to manage their distribution
What is Being Built on Ethereum?
As Ethereum and other projects have made writing DApps protocols quicker and more accessible, a number of possibly disruptive DApps have appeared.
What Will Ethereum be Used For?
Decentralizing Existing Services: Existing services can be decentralized using Ethereum. This will lead to reduced cost and fees by connecting individuals directly and removing intermediaries.
A Million Possibilities: Dapps can disrupt hundreds of established industries like:
- real estate
Considering the trends and advancements in the technology, it’s safer to say that the prospects of Ethereum as a platform seems pretty bright. As the industry and developers continue to invest their resources, faith and time in the technology, blockchain community will continue to prosper.
This brings us to the end of ” What Is Ethereum ” blog. Hope it was helpful and informative.
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