With bitcoin, the world changed and started adopting the new way of decentralization. However, bitcoin is not perfect as it only represents the first generation of decentralized technology.
That’s where Ethereum comes in. Ethereum distributed ledger technology represents a very strong community and it is also the second-largest cryptocurrency out there. In the current age of decentralization, it is important to learn about Ethereum.
In this post, we will take a closer look at Ethereum and everything that you need to know about Ethereum blockchain.
What is Ethereum?
Ethereum is the brainchild of Vitalik Buterin and Gavin Wood. It came into existence, 5 years ago in 2015. The main aim of the project was to create an open-source decentralized platform with smart contract functionality.
Under the hood, Ethereum is all blockchain technology. Its core aim is to replace centralized computing systems and provide a stable yet effective way to create solutions on decentralized platforms.
The popular online platforms that you use on the regular basis are controlled by the centralized entity that you use. This means that you are tied to their terms and conditions, and they have complete control over their platforms. These platforms are also not that great when it comes to security as they represent a single failure point. So, if you are using an online eCommerce platform, you are at risk of your credentials getting stolen in case the eCommerce site gets compromised.
Ethereum solves the problem by providing a decentralized app store using blockchain technology. With ethereum, the user gets control of their actions and becomes the center of the changes around the network.
Smart Contracts: The Core
At the core of Ethereum philosophy, we have smart contracts. The smart contract enables automation among parties without the need for any intervention from a third party. This is possible because smart contracts can be customized and managed according to the needs of the parties.
The parties need to agree upon the said actions which are then coded in the smart contract. With careful planning and execution, the smart contract is made live on the network. Smart contracts when made live are hard to change, but they can be done through careful execution.
To understand smart contract capabilities, let’s quickly go through an example. Let’s say a person is looking to buy property using their cryptocurrency. The seller, on the other hand, who deals in real estate has embedded blockchain technology within their solution. To facilitate the process, they need to create a smart contract where they set conditions for the payment for the property. For instance, they can set the initial payment to 25% value of the property. The rest of the payment is set to 10 years EMIs through a bank provider. Once all the payment is made, the property owner is automatically transferred to the buyer.
Bitcoin vs. Ethereum
At the core, both bitcoin and ethereum use blockchain technology at its core. If we consider bitcoin as the first generation of decentralized technology, then ethereum easily qualifies as the second generation of decentralized technology. Apart from the similarities, Etherum works differently under the hood as it offers users the ability to create and manage decentralized apps(dApps) and smart contracts.
Etherum main use purpose is to provide value in the real world. In contrast, Bitcoin is mainly used as value storage similar to gold in the real world.
Also Read: Corda vs Hyperledger vs Ethereum
Ethereum: a programmable approach to blockchain technology
Ethereum is undoubtedly a programmable blockchain network. It provides the tools and means for developers to create decentralized applications. Smart contracts enable developers to create business code that offers automation for different kinds of applications. There are plenty of use-cases for Ethereum including smart contracts usage in financial and banking sectors, prediction markets, DAICOs or ICOS, and much more!
So did you learn ethereum? Comment below and let us know.