In the simplest definition, Ethereum is an open software platform based on Blockchain technology that allows developers to build and deploy decentralised applications. But, what is open software, what is Blockchain and what are those decentralised applications?
To break down, open source software is computer software with its source code made freely available and anyone has the right to study, change and distribute the software to anyone for any purpose. To understand Blockchain, please click the link somewhere here. And what is decentralized applications? It should contain four things. 1) The application has to be open-source and cannot be controlled by single entity 2) all data’s should be cryptographically stored in public, decentralized Blockchain 3) the app must use cryptographic token to access the application 4) Finally, tokens should be generated to prove the value nodes that contribute to this network.
Let us get into little bit of history.
Vitalik Buterin initially described Ethereum in late 2013 as a result of his research and work in the Bitcoin community. Shortly thereafter, Vitalik published the Ethereum white paper, where he describes in detail the technical design and rationale for the Ethereum protocol and smart contracts architecture. In January 2014, Vitalik at the North American Bitcoin Conference in Miami, Florida, USA, formally announced Ethereum.
Beginning in July 2014, Ethereum distributed the initial allocation of ether via a 42-day public ether presale, netting 31,591 Bitcoins, worth $18,439,086 at that time, in exchange for about 60,102,216 ether. The results of the sale were initially used to pay back mounting legal debts and also for the months of developer effort that had yet to be compensated, and to finance the ongoing development of the Ethereum.
If you are now clearer, let us get into Ethereum in detail.
Bitcoin and other crypto currencies were developed exclusively to operate as peer-to-peer digital currencies. Ethereum on the other side came up with its core innovation; the Ethereum Virtual Machine (EVM). It makes the process of creating Blockchain applications much easier and efficient than ever before. Instead of having to build an entirely original Blockchain for each new application, Ethereum enables the development of potentially thousands of different applications all on one platform. So you are seeing a lot of ICO’S flooding in the crypto space.
Ethereum does have it’s own currency, Ether, and like Bitcoin it uses Blockchain technology to record and verify all transactions, but that’s where the similarities end. Essentially Ethereum is the world’s first decentralised computer; it uses the Internet and a Blockchain to keep everything synced and unhackable. To understand more about Ethereum it is best if you understand smart contract.
So what is smart contract?
Smart contracts help you exchange money, property, shares or anything value in a transparent, conflict-free way, while avoiding the services of a middlemen. Please give me some time, let me read in the words of Vitalik Buterin, programmer of Ethereum, “in a smart contract approach, an asset or currency is transferred into a program “and the program runs this code and at some point it automatically validates a condition and it automatically determines whether the asset should go to one person or back to the other person, or whether it should be immediately refunded to the person who sent it or some combination thereof.”
In the meantime, the decentralized ledger also stores and duplicates the document which gives it a certain security and immutability. Example, if you rent an apartment from me through Blockchain paying crypto currency, you will get a receipt which is held in our virtual contracts; I give you the digital entry key which comes to you by a specified date. If the key doesn’t come on time, the Blockchain releases a refund to you. If I send the key before the rental date, the function holds it releasing both the fee and key to you and me respectively when the date arrives. The document or contract is cancelled automatically cancelled after the time, and the code cannot be interfered by either of us without other knowing, since all the participants are simultaneously alerted. This was my simplest example of Ethereum.
The days for Blockchain and crypto currency is in early stage as it is being tested, but there is no doubt that Ethereum will be a truly transformational platform. There are many exciting applications built on it and collection of large corporations including Microsoft, Intel and JP Morgan Chase working with Ethereum show how much of potential it has to offer.
So Crypto enthusiast these are my thoughts and a bit of research on Ethereum. “1 topic, thousand views, you better be rational’.