What is Ethereum?
Ethereum is a blockchain technology that allows users to run programs in its secure environment. It differs sharply with Bitcoin Blockchain in the sense that the latter enables users to manage cryptocurrencies only. Blockchain, on the other hand, is merely a vast electronic system where other decentralized applications are built on.
Let’s assume email is an application that runs on the internet. This makes the internet a blockchain basis or foundation upon which other apps are deployed on. Unlike the internet which is mainly centralized, the Ethereum blockchain is distributed across several nodes to avoid the traditional interferences created figureheads.
Miners on Bitcoin blockchain get paid in BTC tokens. Similarly, on Ethereum, miners get paid in ether. Ether is a cryptocurrency token that fuels the Ethereum blockchain. This token can be traded on exchanges besides being used to pay for transaction fees within its network.
The smart contract is one of the services offered by the Ethereum network. It’s a self-sustaining system used to exchange valuable things like money, shares, content, and property only when a certain condition is fulfilled. A smart contract is like a computer code, programmed to perform in a certain way without censorship, fraud, downtime or any other form of third-party meddling. In basic terms, this immutable technology is more of an escrow service that allows two people who don’t trust each other to transact peacefully.
How smart contract works
Let’s say Vitalik wants Sam to sell him a grooming kit but he isn’t sure whether Sam will send it over once he has wired him the cash. So, Vitalik and Sam deploy a smart contract on the Ethereum blockchain. Sam will go ahead and send the kit over to Vitalik who upon receiving it, will give the escrow an “okay” to release funds over to Sam. Most blockchains, including Bitcoin’s, have some serious limitations when it comes to code processing. Surprisingly, Ethereum has an extraordinary ability to process multiple codes for as many application as possible. This has given developers opportunity to build on this foundation any technology they deem useful. This is one of the reasons Ethereum blockchain is favorable amongst many techie individuals.
What makes Ethereum so accommodating?
EVM. Yes, that’s it. It stands for Ethereum Virtual Machine. This is the core innovation in Ethereum network that allows all developers to come up with many applications on the Ethereum without necessarily having to develop their own Blockchain. Initially, Bitcoin and other blockchain were vastly individualistic. They were designed for a limited purpose. In the Bitcoin ecosystem, that purpose was to facilitate peer-to-peer payments; nothing more. This meant any programmer with a brilliant idea to build a blockchain app had first to think about developing another blockchain in the first place. But with Ethereum’s EVM, techie guys can save time and resources by shooting straight to app building.
Immutability – once a record has been written, there is no re-writing or any form of alteration that’s going to happen. This prevents hackers and fraudsters from tampering with records.
Corruption and meddle-proof – every action on this blockchain is reached upon through the principle of consensus. This makes censorship nothing but a pipe dream.
Zero downtime – apps never go down on this network and neither can they be switched off
Secure – Ethereum blockchain is guarded by cryptography and its lack of a central point. This means any third-party meddling cannot be witnessed. The network is foolproof against fraud and hacking as well.
Cons of Ethereum
Not void of faults – contrary to what many people believe, decentralized apps have their weaknesses too. Smart contracts are created by humans and thus prone to issues like bugs, unintended adverse actions. Also, any action taken by one of the nodes (or 51% attack) makes the whole concept of decentralization quite questionable.
Where to buy Ethereum
Ethereum can be bought on almost all major exchanges like Coinbase, GDAX, Gemini, CEX.IO, and Bittrex.
When it comes to the usefulness of the blockchain system, no technology stands taller like Ethereum. It’s basically a go-to blockchain for most developers and big companies. Without a doubt, Ethereum is cut out for huge success in the coming years.