Ethereum 101: What is Ethereum.

Advertisements

Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether (Popularly known as ETH) is the native cryptocurrency of the platform. It is the second-largest cryptocurrency by market capitalization, after Bitcoin. Ethereum is the most actively used blockchain.

Ethereum Blockchain is a home to innovations like mobile payment, gaming, social media apps and so much more but it’s best to leave the technical side if you are not really interested in it or can get bored by it but if you are really interested in the technical aspect of it you can learn more about it here.

History of Ethereum.

Programmer Vitalik Buterin first described Ethereum in a 2013 white paper. Gavin Wood, Charles Hoskinson, Anthony Di Iorio, Mihai Alisie, Amir Chetrit, Joseph Lubin and Jeffrey Wilcke are co-founders In 2014, Swiss company Ethereum Switzerland GmbH (EthSuisse) began formal development of the software. Blockchain technology is the basis of  Ethereum. It is a type of database that collects information together in groups, or blocks. Each new piece of information that follows a newly added block is put together into a newly formed block that is then added to the chain. Block chain structures data into blocks that are chained together.

Launched in 2015, Ethereum has its own associated cryptocurrency, called ether. It is the second largest cryptocurrency in terms of market capitalization, compared to Bitcoin. But in 2020, it was said to gain more than Bitcoin – more than 500% over the year. In March 2021 it was announced that Ethereum blockchain developers approved one of the biggest changes to the network since its launch, a move that would reduce its supply later in the year – thereby potentially creating bigger gains in price.

ETH is what drives the larger Ethereum Network, which itself has many opportunities for development. Ethereum is also backed by many Fortune 500 companies and is being used by financial institutions as well, making it attractive in that way.

In March 2021, a buyer named Metakovan used ether to buy a digital artwork NFT by the artist Beeple for a whopping $69.3 million.

Uses of Ethereum.

Ethereum enables developers to build and deploy decentralized applications. A decentralized application or Dapp serve some particular purpose to its users. Bitcoin, for example, is a Dapp that provides its users with a peer to peer electronic cash system that enables online Bitcoin payments. Because decentralized applications are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.

Ethereum can also be used to build Decentralized Autonomous Organizations (DAO). A DAO is a fully autonomous, decentralized organization with no single leader. DAO’s are run by programming code, on a collection of smart contracts written on ethereum. The code is designed to replace the rules and structure of a traditional organization, eliminating the need for people and centralized control. A DAO is owned by everyone who purchases tokens, but instead of each token equating to equity shares & ownership, tokens act as contributions that give people voting rights.

Ethereum is also being used as a platform to launch other cryptocurrencies. Because of the ERC20 token standard defined by the Ethereum Foundation, other developers can issue their own versions of this token and raise funds with an initial coin offering (ICO). In this fundraising strategy, the issuers of the token set an amount they want to raise, offer it in a crowd sale, and receive Ether in exchange. Billions of dollars have been raised by ICOs on the ethereum platform in the last two years, and one of the most valuable cryptocurrencies in the world, EOS, is an ERC20 token.

Ethereum has recently created a new standard called the ERC721 token for tracking unique digital assets. One of the biggest use cases currently for such tokens is digital collectibles, as the infrastructure allows for people to prove ownership of scarce digital goods. Many games are currently being built using this technology, such as the overnight hit CryptoKitties, a game where you can collect and breed digital cats.

Benefits of the Ethereum blockchain.

  • Corruption & tamper proof – Apps are based on a network formed around the principle of consensus, making censorship impossible.
  • Secure – With no central point of failure and secured using cryptography, applications are well protected against hacking attacks and fraudulent activities.
  • Zero downtime – Apps never go down and can never be switched off.

Disadvantages of the Ethereum network.

Despite it’s numerous benefits, decentralized applications aren’t faultless. Because smart contract code is written by humans, smart contracts are only as good as the people who write them. Code bugs or oversights can lead to unintended adverse actions being taken. If a mistake in the code gets exploited, there is no efficient way in which an attack or exploitation 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. Also, any action taken by a central party raises serious questions about the decentralized nature of an application.

Accessing the Ethereum Blockchain.

There are many ways you can plug into the ethereum network, one of the easiest ways is to use 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. Although initially built as a Chrome plugin, MetaMask supports Firefox and the Brave Browser as well.

While it’s still early days, Mist, MetaMask and a variety of other browsers look set to make blockchain-based applications accessible to more people than ever before.

Checkout the latest releases of Mist browser here.

Author: Austine