An introduction to the basics of what Ethereum is and how it works. It covers some of the key differences between Bitcoin and Ethereum and other features that make this cryptocurrency unique. Finally, it touches on why many people are excited about its potential for disrupting more than just financial transactions in the future.
Ethereum is a cryptocurrency and blockchain program with smart contract functionality. It provides a decentralized virtual machine that can perform lines using a global system of public nodes. Ethereum also presents a utility token called “ether,” which can be transferred between participants, stored in a cryptocurrency wallet, or sent to others as an encrypted transaction.
There are sites such as Uphold to buy Ethereum easily.
The word “Ethereum” is derived from the Latin word ether meaning “upper air.” The name reflects the hope that ether will bring humanity into space.
Who created it?
VitalikButerin created Ethereum in 2013 as a cryptocurrency alternative to Bitcoin, which was becoming too expensive for microtransactions. It has since developed to be one of the largest cryptocurrencies globally, with over 100 million market caps at the time of writing (Nov 2017).
The project was bootstrapped via an ether presale in August 2014 by fans worldwide; it went live on 30 July 2015 after nearly two years of extensive testing with bug bounties paid out from The DAO’s Ether endowment (currently worth over USD 150 million).
Specifications of Ethereum
There are two major parts to Ethereum: ether, the currency token, and smart contracts, which are scripts that can execute commands automatically when certain conditions are met. Some might think this sounds like “just another blockchain.” The difference between Ethereum and other blockchains is that Ethereum can be used to store and execute scripts.
While the Bitcoin blockchain can only process financial transactions, smart contracts in Ethereum are capable of much more complex tasks such as running so-called decentralized applications.
How is Ethereum better than bitcoin?
Ethereum is often described as Bitcoin+, and for a good reason:
- Ethereum runs scripts (smart contracts), which allows it to do much more than the largest financial transactions that Bitcoin can handle.
- It’s flexible, where bitcoin is static. If you want a new feature on your blockchain, get in line with all other developers who also have their ideas about changing things! With Ethereum, everyone has access to the same tools–if they know what they’re doing.
- Developers love Ethereum because its design makes programming easier and faster by taking care of some menial tasks like pricing schemes or identity verification, at least compared to something like Hyperledger Fabric.
- Ethereum can be thought of as a giant decentralized computer powered by all connected users, has unlimited scale, and zero downtime. It provides an immutable record of execution for code in the form of transactions on its blockchain, stored securely forever. This allows it to run smart contracts where people only pay if they get what they want: efficient self-enforcing agreements without any middleman needed!
- Ethereum is a decentralized program that runs “smart” contracts and guarantees their instant or eventual execution, and immune from censorship, downtime, fraud, or third-party interference while operating autonomously with no central point of failure. These assurances come from principles built into Ethereum’s protocol design, including consensus by miners (who secure and validate blocks), economic incentives through gas prices which measure computational work done by nodes; immutability derived from the need to preserve the blockchain’s integrity; and finally, transparency through a publicly available transaction log.
- Ethereum is also more than just an abstract concept or academic exercise in computer science: it has real-world applications currently being built by companies worldwide. Ethereum can be used to order, decentralize, protected, and trade just about anything: from physical and digital objects to portions of time or space like an office workspace.
- The Ethereum blockchain is a crucial part of the token sale process for companies looking to create custom tokens that investors can monetize. The ERC-20 protocol gives developers building on Ethereum a common set of rules about how their new tokens will function.
In the end
Ethereum is a form of cryptocurrency that can be used to purchase goods and services. In the past few years, it has become one of the most popular forms of digital currency due to its ability to facilitate cross-border transactions without any fees or delay times. Though there are other cryptocurrencies out there, such as Bitcoin, Ethereum’s value has continued to rise while others have fallen dramatically.