Imagine a decentralized world where you can trade with decentralized applications, execute decentralized contracts and use any kind of financial services, without relying on intermediaries or going to the bank. In this world, all the systems are under your control, they never stop working, and no one can interfere with them. Ethereum is here to make this dream come true.
In this article, we first explain Ethereum and its main features in plain language, so that you can fully understand this network and its aims. After that, we go through some technical details and Ethereum’s solutions for achieving its purposes. Finally, we have a look at Ether’s price history and refer to some frequently asked questions about this popular blockchain. Stay with us.
What is Ethereum?
One simple and at the same time, comprehensive definition of Ethereum was given by one of its most important developers, called Joseph Lubin. According to experts at Crypto desk that is a Dubai based crypto exchange, Ethereum was created with the purpose that we do not need any bank, company, or any other foundation to fulfill our routine needs..
It is the second-largest cryptocurrency by market cap and as you may have guessed, the first title goes to Bitcoin. Ethereum launched on the 30th of July, 2015 and this means that it is 6 years older than Bitcoin. Bitcoin was the world’s first cryptocurrency and its aim was to decentralize the monetary system. Ethereum, as the world’s second cryptocurrency, went one step further and aimed to “decentralize everything”.
Ethereum’s whitepaper was published in 2013 and the whole project officially launched in 2015. The credit of designing and creating Ethereum goes to a young Russian-Canadian boy named “Vitalik Buterin”. Vitalik himself was one of Bitcoin’s early supporters and the idea behind Bitcoin inspired him to think about decentralizing everything.
The following part will elaborate on this idea of “decentralizing everything” a little more, for it is a foundational concept in Ethereum’s philosophy. And after that, we will take a deeper look at Ethereum’s history and technical details.
Decentralizing everything; the idea behind Ethereum
To fully understand Ethereum, let’s take a look at a famous social media application like Instagram. Instagram is a widely-used application and it has millions of users from all over the world, but it suffers from one big problem: it is centralized.
Instagram belongs to Facebook and whenever this technology giant decides, it can make any changes, limit some people’s access and even sell some data. According to Ethereum’s philosophy, we can build a new Instagram that instead of Facebook, belongs to all its users and the users are in full control of their own data.
This is just one use case of Ethereum and its technology. Using Ethereum, we can run completely transparent elections with the minimum likeliness of cheating, we can decentralize the banking system, we can eliminate all intermediaries like real-estates, we can have a decentralized Internet, and in one word, we can decentralize everything.
You may now be wondering how Ethereum actually brings all these theories into practice and how it makes these dreams come true. All these goals are achieved using a revolutionary innovation called “smart contract”.
What are smart contracts and what do they do?
A smart contract is a code that is executed on the blockchain. It is a digital contract that when certain conditions are met, runs some pre-defined commands automatically. After recording the contract on an open blockchain like Ethereum, no one can stop it. In other words, it has an executive guarantee. In smart contracts, codes replace third parties and eliminate the need to trust. If the previously set conditions are met, no one can stop these contracts, even the person who has created them.
Using smart contracts, we can develop completely decentralized applications or so-called “DApps” that play an important role in the world Ethereum wishes to build.
What are DApps and how do they differ from normal applications?
According to buybitcoinuae.ae experts, To better understand what DApps are and what they do, Take a look at the structure of an application. An application consists of two fundamental parts: a front end and a back end. The front end is the part users deal with and it can consist of the UI, texts, images, sounds, videos, and so on. The back end is the underlying part that carries on the necessary computations and stores and manages the data.
A decentralized application or a DApp also consists of a front end and a back end. It looks like a web-based application and regarding the front-end, it doesn’t differ from a normal application. However, the difference between a DApp and a traditional application lies in the back end. In decentralized applications, instead of centralized servers, the data is stored on the blockchain and smart contracts. In other words, a DApp’s codes are written on a smart contract and then executed on the blockchain. Therefore, working with a DApp is as easy as working with a usual application and the user doesn’t feel any significant difference.
One of the biggest achievements of Ethereum for the world of cryptocurrencies was that it made it possible for all the developers to design and create their own digital assets, or “tokens”, without needing to run an independent blockchain. Before Ethereum, anyone who wished to launch a new cryptocurrency had to develop a new independent blockchain, and running a blockchain is a burdensome costly process. Ethereum by removing this obstacle introduced hundreds of thousands of new cryptocurrencies, many of which are among the most successful blockchain projects now.
If you want to know how Ethereum makes this possible and how a token is created on this blockchain, stay tuned for the second part of this article.
