If you want to understand Ethereum and learn the ins and outs of how it works and what it can be used for, without going too deep into the technical side of things, you are going to first have to grasp the concept of the internet. If you haven’t heard about Ethereum, then you’ve probably been out of touch with the cryptocurrency sector for a while. Don’t worry, though – we will get you up to speed in this article.
While there are a number of approaches to learning about Ethereum, this approach is meant to simplify the process by focusing only on the basics so you do not get overwhelmed.
Let’s dive in…
Today, our passwords, financial information, and personal data are all stored on other people’s networks. How? All of it is largely stored in servers and clouds owned by companies like Facebook, Google or Amazon.
This may seem like an odd setup at first, but it actually has a number of conveniences, because these industry giants create teams of specialists that help store and secure the data, as well as removing the costs that come with uptime and hosting.
However, like most things, this convenience comes with vulnerabilities as well. Unfortunately, as we have learned the hard way, hackers or governments can gain unwelcome access to your files without you knowing, and can then influence or attack a third-party service – which means they can change, steal, or leak crucial information.
Brian Behlendorf, who is the creator of the Apache Web Server, has labeled this centralized design the “original sin” of the Internet. Those who agree with Behlendorf argue that the Internet was always meant to be decentralized, and a splintered movement has come about using new tools, such as blockchain technology, to help achieve this goal.
Ethereum is one of the latest technologies to join this movement.
Bitcoin might be working towards disrupting PayPal and online banking, but Ethereum has other plans in mind: Ethereum wants to use a blockchain to replace internet third parties – which are parties that transfer mortgages, store data, and keep a record of complex financial instruments.
At its simplest, Ethereum is an open software platform and it is based on blockchain technology that allows developers to create and distribute decentralized applications. Because Ethereum is run off a decentralized system, there is no central authority holding all of the information that’s used to create those applications.
The crypto tokens on this platform are referred to as ether. What is this? Well, ether is designed to be used for making payments for hosting and accessing apps on the Ethereum blockchain. Similar to other cryptocurrencies, ether has a value and it can be bought or sold for an equivalent value of Fiat or other cryptocurrencies. Additionally, ether is completely dependent on supply and demand, thus making it extremely volatile. However, the volatility of ethers value is what makes it an ideal asset for trading.
Both Ethereum and Bitcoin are distributed public blockchain networks, but there are a few crucial differences between the two.
Ethereum to Become The ‘World Computer’
To simplify, Ethereum is working towards becoming a “World Computer” that would decentralize – and some say, democratize – the existing client-server model. When it comes to Ethereum, the cloud and servers are replaced by thousands of “nodes” which are run by volunteers from across the world (thus the term “world computer”).
The aim is that Ethereum would enable this same functionality to people anywhere in the world, and allow them to compete to offer services on top of this infrastructure. Think of it this way: If you are scrolling through the app store, you will see a variety of ccolourful squares which represent everything from messaging apps to games to banking. Essentially, these apps rely on the company (or in certain cases, another third-party service) to store your credit card information, transaction history, and other personal data somewhere. Generally speaking, it tends to be stored on servers that are controlled by third parties.
Of course, your choice of apps is also governed by third parties, as Google and Apple maintain and curate the apps you’re able to download or purchase. Think of an online document service like Google Docs or Evernote. If all goes as planned, Ethereum would return control of the data in these sorts of services to its owner and the creative rights to its rightful owner.
The idea is this: one entity will no longer have control over your notes and no one is eligible to suddenly ban the app itself, which would temporarily take all of your notebooks offline. Keep in mind only the user can make the changes, not any other entity.
Looking at this theoretically, it combines the control that people had over their information in the past with the ease of obtaining information that we are used to in society today. Every time you save something or add or delete notes, every single node on the network is making the change.
It’s worth mentioning that this idea has been met with cynicism, and a number of people believe there is a downside to decentralized applications.
Even though the apps appear to be possible, it is still unclear as to which blockchain applications will actually prove useful, capable, or secure. Further, we do not know if they will ever be as convenient to use as the apps we are used to today.
Regardless, however, Ethereum is a form of cryptocurrency that is making waves in the cryptocurrency ecosystem. It has demonstrated good growth in its value in recent months, and this increase can be attributed to a number of factors, such as the developments currently happening on the platform, and its future potential and boosted trading activity.
So while there are still a few bugs to sort out, this is definitely something one should think about getting into, or at the very least, understanding the basics so that if they ever do want to journey forward in the crypto sector, they will know what they will be up to bat with.
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