What is Ethereum?
I know. It's the second-largest digital currency.
I can't get it.
Is it as disruptive as Bitcoin?
Is it a realistic goal?
When you're bored of explanations that seem like technical nonsense, stick around to learn more about Ethereum.
Before we talk about Ethereum, we need to review Bitcoin since that's where Ethereum was birthed. Bitcoin is decentralized money by now.
Pre-Bitcoin, using money digitally meant using a third party like a bank or PayPal. Even so, the funds were all supplied by the government. However, with the creation of Bitcoin, individuals may trade directly without the need for an intermediary. Every Bitcoin transaction is confirmed and approved by the entire network. System failure is impossible due to the absence of a single point of failure.
While we now know that money can be decentralized, what other social activities that are centralized today could be decentralized? Voting?
Counting and validating votes require a central authority. Currently, property registration is done by a centralized registration authority. Facebook is all about main servers that store all of the data we upload to them. We could utilize Blockchain technology to decentralize other processes as well. Blockchain technology was created as a side effect of the introduction of Bitcoin. They are fusing existing technologies like cryptography, proof of work, and decentralized network architecture to form a system where decisions are made without a central authority. "Blockchain technology" did not exist until Bitcoin was created. The phrase "Bitcoin became a reality" also gave rise to the idea of "blockchain technology." Blockchain is like the Internet on top of which you can create different programs and applications. There are also other currency alternatives available.
Thus, excitement was generated, and individuals began to think about decentralizing more.
Ethereum. Ethereum was initially conceived in 2013 and was brought to life in 2014 by Vitalik Buterin, the co-founder of Bitcoin Magazine. Ethereum is the Do-It-Yourself platform for decentralized programs (or Dapps) - decentralized apps. To make a decentralized application that no single person controls, not even you, you have to understand the Ethereum programming language called Solidity and begin coding. Ethereum features thousands of machines working independently, so it's completely decentralized. These machines, called nodes, ensure that the code in a deployed application is executed as it should. Dapps can be implemented worldwide via Ethereum. A platform, not a currency. Ether is the money that is used to reward the network.
Ethereum's aim is to decentralize the Internet. Wait? The Internet is centralized, correct? The Internet is decentralized, and anyone can start their own site.
While theoretically true, in practice, Amazon, Google, Facebook, and Netflix dominate the Internet as we know it. Barely anything on the Internet happens without an intermediary or 3rd party. However, once the principle of digital decentralization was proven by Bitcoin, other new prospects appeared. Finally, we can create and envisage an Internet that links people directly without a centralized 3rd party.
Directly "renting" hard drive space enables others to make Dropbox obsolete. Drivers can bypass "Uber" and go now to passengers. Cryptocurrencies are tradeable directly between people without the risk of a hacked exchange or stolen money. You don't need a central authority to coordinate anything when using Ethereum. A network of computers, working together, is what creates one supercomputer. There you have it; that's what Ethereum does. Solidity is used to construct "Smart Contracts," which are the logic that runs Dapps.
Contracts are simply sets of "Ifs" and "Then." the conditions and actions I provide my landlord $1500 on the first of the month, and he is OK with me occupying the apartment. That's how smart contracts on Ethereum function. Ethereum developers define their Dapp's conditions, and then the Ethereum network performs it. They are called smart contracts because they deal with all of the contract characteristics. If the smart contract is utilized for paying rent, the landlord doesn't need to actively collect the money. The contract "knows" if the money has been sent. If I did send the money, then I will be allowed to access my apartment door. I will be prevented from paying. Smart contracts also have some disadvantages. Instead of getting rid of a renter who isn't paying, a smart contract automatically locks them out of their flat. On the other hand, a smart contract would take other things into consideration as well, for example, extenuating circumstances or the contract's writing spirit. As a judge, it would be a perfect one. Ethereum's "smart contract" isn't intelligent at all. Uncompromisingly letter rigorous. It completely respects the regulations, and it can't afford to take any of the "spirit" of the legislation into consideration. Smart contracts cannot be modified once they have been implemented on the Ethereum network.
It is fixed.
The only way to alter this contract is to convince the whole Ethereum network. Thus, this causes a severe problem because, unlike Bitcoin, Ethereum was developed with the capability to generate incredibly complicated contracts. If there are more ambiguities, it will be harder to enforce. With smart contracts, security means handling every potential method an agreement might be executed so that the contract performs just what the originator intended. At the start, Ethereum decided that "code is the law." The Ethereum contract is the ultimate authority. Thus nobody could overrule it. When the DAO event occurred, all that was for naught. Decentralized Autonomous Organization (DAO) allowed people to deposit money and receive returns based on the investments the DAO made. Decisions will be crowd-sourced and decentralized. The DAO raised $150 million in Ether, while Ether was trading about $20. After this all sounded excellent, the code was not secured adequately and allowed someone to drain the DAO of money. You may now say that the guy who drained the DAO was a "hacker."
However, others might contend that this was just an intelligent contract loophole abuser. This isn't drastically different from a creative lawyer discovering a loophole in the current laws' enforcement. The Ethereum community concluded that code no longer constitutes law and hence altered the Ethereum laws in order to return all the money to the DAO.In other words, the Ethereum developers bailed out the contract writers and investors. A small percentage of people who disagreed with the decision adhered to the original Ethereum blockchain after it was updated. This is how Ethereum Classic was created. We have discussed a lot, and that is all I want to say about EthereumEthereum is just a number of computers working together like one supercomputer to carry out code that runs Dapps. However, it requires money to procure, power, store, and cool the devices. Thus, Ether was created. Ether is the money that is used to motivate people to run the Ethereum protocol on their computers. Bitcoin miners get rewarded for maintaining the blockchain much like this. To deploy a smart contract to the Ethereum platform, the author must pay. That payment is in the form of Ether. This is done to ensure that the Ethereum network's resources are not wasted on useless computations. Ether was initially created in Ethereum.