Trying to explain exactly what Ethereum is and how it works is hard. It’s pretty much the same as trying to explain how TV works – how does the image arrive at the screen? How are the channels arranged? Where does it go when it’s switched off? Or, how the Internet works, or apps…I mean if you’re tech-inclined you might want to know the nitty-gritty, plus you’d be able to understand the explanation without too much trouble – but for some people, ok, most people, first off we just want to know how to switch it on and what it can be used for.Read more
So, for those novices among you, here are 5 key things about Ethereum that will help you feel informed (enough)… and not confused, confounded and covfefe’d:
1. It’s an open-source, decentralized computing platform that runs on blockchain technology and facilitates smart contracts.
In fact, while blockchain was created specifically to facilitate bitcoin, Ethereum is considered to be much more exciting because it enables the use of blockchain tech beyond cryptocurrency. Ethereum is the brainchild of a young man (just 19 when he wrote his white paper for Ethereum) named Vitalik Buterin:
“Buterin first described Ethereum in a white paper in late 2013. Buterin argued that bitcoin needed a scripting language for application development. But when he failed to gain agreement, he proposed development of a new platform with a more general scripting language.”
2. Correction, it facilitates smart contracts and Dapps
To put it very, very simply – DApps are ‘decentralised applications’ – which means they aren’t owned by any one person or company, can’t be censored, deleted or altered. If Twitter, for example, were a DApp it would connect people directly without filtering by the owner (Twitter headquarters), your tweet couldn’t be deleted once you’d tweeted it and couldn’t be tampered with. Also, you’d know that all those likes your tweet gathers are real people and not bots. Another advantage: anyone can publish a DApp which, if you’ve attempted to get through the process of having one published or featured in the current system, is exciting to think about. Ethereum is key in facilitating DApps – “it’s like a decentralized app store”
3. Ethereum has its own token called ether or ETH.
Ether can function as a simple digital currency – you can buy ether and save it as you would bitcoin, for example; but its main feature is to facilitate peer-to-peer contracts. You can send ether to a smart contract that will then execute itself when certain specific parameters are met. Here’s a startling example of how that might work, from an article on Medium: “…you can create a smart contract that will send your ether to a loved one when certain conditions are met, such as an outside oracle verifying your death.”
4. Enables fundraising without the middleman
Raising funds for a new project using Ethereum means that you can appeal directly for pledges from the community. Parameters for go-ahead are set using smart contracts, so the money that is raised will be available immediately if the funding goal is reached, or returned to each contributor immediately if it isn’t. No middleman taking a cut, no administrative fuss, no ifs no buts.
5. AKA: the first shared global computer (and a quick recap)
Ethereum was created to broaden the scope of what the blockchain could do (it was agreed it had to be useful for more than cryptocurrencies, but Buterin was the first to create a language that could be used to make that possible). It is built on the blockchain system and allows for smart contracts and DApps to be created. This could replace the way computers and the Internet function. That’s what all the excitement is about. It could take ownership away from monopolies like Facebook, Amazon, Google, Twitter, Uber and Airbnb and replace it with a decentralized ownership where micropayments go to the individuals who use it.
So, that’s the idea. It’s a long way off and there are many, many kinks to work out – but that’s the new Utopian dream that may one day become reality, powered by blockchain, facilitated by Ethereum.
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