What is Ethereum?

Ethereum, is a new revolution in computer made from concepts and technologies originally seen in Bitcoin. Bitcoin is a digital currency that offers online shared world ledgers, that have been securely recording each and every transaction made in bitcoins. Ethereum, has been seen to use many similar traits seen in bitcoins, for instance, peer to peer networking, and blockchains. The market today is for users who wish to run secure and flexible platforms. To help understand what it means, you have to go back to the beginning.

 

Satoshi Nakamoto’s developed Bitcoin in 2009, and it was seen as a radical development in the financial sector. It was the first example of digital currency that does not have any inherent value, no centralized command center, or anyone who can control it. Furthermore, another, possibly more important, feature of the Bitcoin system is, its blockchain technology. It is an online ledger that stores information, and keeps it transparent for others to check.

 

Before, the inception of Ethereum, there were already many companies in the market, trying to use the blockchain technology for applications. But, as these companies had restricted themselves, were limited, and only supported one or two applications. However, the main idea behind Ethereum, is what allowed it to pass through those limitations. Because, instead of using many blockchain protocols, each of which supported a few applications; or at times even one blockchain protocol supporting a long list of applications, the blockchain protocol is able to support a built-in program that can ensure that any application can be written on its core foundations.

 

This way the protocol was able to support all the applications that have been developed, and will be able to support applications that still have to be developed. This allows innovators to develop ideas on top of blockchain technology, with very little effort, and highly efficient speed.

 

The bitcoin might be described as the worldwide ledger, but is only restricted to record balance in one single currency, whereas Ethereum is known to be a world computer. It is a place where can upload and run programs. These programs are guaranteed to run exactly as they were written, on a decentralized and highly robust consensus network; a network which consists of thousands of computers worldwide. The same blockchain technology is now used as the base, and the safety and security is guaranteed by identical kinds of economic incentives, cryptography, but its ability to execute code has opened to developers worldwide.

 

For instance, imagine that you are using Slock (smart lock), which is an Ethereum-enabled internet of things platform, which allows you to rent your bicycle. You put a Slock on your bicycle, and registered for a smart contract to the Ethereum Blockchain. Now, someone took you up on your offer and paid you through cryptocurrency, the contract will forwards the digital currency to you, and publish a record saying that the sender is allowed to access the bike, for a specified period of time. After you have received the coins, you will send a cryptographically signed message to your Slock, which will automatically open it for the decided duration. So the entire process from was done on servers and through third parties.

 

Many applications include financial contracts of different kinds, that range from simple digitization of asses such as stocks, gold, etc. to different forms of derivatives, secure payments for infrastructures such as DNS. All of this is possible without having to rely on any centralized provider that has the keys to your private life. Moreover, more than 100 applications are designed by startups using the base Ethereum created. Whereas Ethereum has been exploring various aspects of the financial institution.

 

Vitalik Buterin, is the creator of Ethereum, and is also the co-founder of Bitcoin Magazine; and the longstanding researcher and developer of blockchain technologies and cryptocurrencies. In an interview he explained that Ethereum, is a technology that takes you into the future with shared world computing platforms will be one day made possible.