Ethereum Platform - What You Should Know
Digital Asset Platforms Series (5 part series — Part 5)
Ethereum is one of the most popular Blockchain platforms. Perhaps you might have come across blog posts written about Ethereum in relation to decentralized applications (DApps), smart contracts, DAO’s, ICO’s as well as tokens.
In this post, we endeavor to answer questions you might have about Ethereum. We shall have a closure look on what it is, how it works, and the value it adds into the crypto sphere and roles it could play in the future. So, here we go!
What is Ethereum?
Ethereum is simply decentralized open-source software (peer to peer network protocol) that operates on Blockchain technology. Decentralized means that Ethereum runs on a network of nodes distributed across the globe. This further implies that no one person can shut down the operations of the platform.
Anyone can run a node on Ethereum the network from anywhere in the globe. All they would need is a computer with an internet connection and no prior permission. The possibility of successfully hacking the platform is also greatly diminished due to the lack of a central point of failure.
Ethereum allows developers to build as well as deploy DApps on the platform without any possibility of censorship, downtime, fraud or even third-party interference.
Who is behind Ethereum?
Ethereum was founded by a Russian- Canadian programmer called Vitalik Buterin. He is also the co-founder of Bitcoin Magazine. Vitalik figured out that smart contracts could change a significant number of industries in which third parties are required in order to transact. A good example here is transforming traditional finance by eliminating the need for intermediaries. After conducting experiments using Bitcoin’s scripting language, he realized that it was not elastic enough for the number of applications he had in mind. That is when he created Ethereum.
So, what is Ethereum used for?
Ethereum aims to provide a platform where anyone can create applications for change of data and value in a secure way. Some of the remarkable applications that can be built on Ethereum include identity management such as blackstack and civic projects, trust and transparency, crowdfunding, marketplaces, copyright and ownership repositories, and governance.
To bring it to perspective, here are a few examples:
ICOs — Most successful ICOs out there, as many as you can remember, were implemented on the Ethereum Blockchain. The platform comes in handy for startup funding.
DApps- Several DApps are built on Ethereum, and perhaps more could be joining soon. Notable examples include; Augur, etherTweet , TenX and Uport.
DAOs- Some of the popular DAOs cropping on the platform include; Digix.io and Dash.
The first step to using Ethereum is setting up an Ethereum wallet and buying some Ether on an exchange platform. After setting up your wallet, you can interact with a variety of applications on the platform, and you can send and receive Ether.
How does Ethereum work?
Ethereum can be seen as a stack of layers built on top of each other. The primary layer that makes all other layers able to function is the Ethereum Blockchain. The second layer consists of software that allows programmers to run smart contracts on Ethereum network (Solidity). The third layer comprises applications offering different services (DApps). So, how do these features function?
The Ethereum Blockchain
This is made up of various computers called nodes. Each node confirms incoming transactions and arranges them into blocks that are then broadcasted to the whole Ethereum platform. The network of computers executes transactions and organizes them into a shared ledger. This allows for the development of a distributed database that can keep a record of all of all the information shared in the network. Transactions can combine value carried in Ether and information in the form of code that passes data and triggers action.
There are several shareholders in the blockchain ecosystem. These shareholders are the nodes, light clients, exchanges and the miners. The nodes enforce consensus and validate transactions. The role of the light clients is to connect nodes so they can receive essential data about the current state of the Blockchain.
Anyone who owns an Ethereum wallet can carry out safe transactions on the platform without having to run a node. The user can use the platform without having to download loads of data or process copies of each transaction carried out.
Solidity
Solidity is the programming language of the Ethereum platform. The language is very similar to JavaScript. Anybody using Ethereum is allowed to create tokens that can be exchanged by all users in the network. This enables a broad range of applications for the users. If you are interested to learn how to program in solidity, you can find free tutorials online as well also on Ethereum’s official website.
DApps
Ethereum works as a decentralized worldwide supercomputer that allows execution of third-party applications. Over 900 applications exist on the platform. 30 percent of these are already live while the other 70 percent are still undergoing development. The transparent nature of Ethereum encourages developers from various parts of the world to build hands and create a tremendous and robust community whose goal is to expand the applications and functionalities of the platform. Decentralized applications have several advantages over centralized private applications. Some of the benefits that peer to peer applications offer are transparency, resilience, and better code.
What’s next for Ethereum?
Ethereum is a young technology. While the protocol may reach its final state in the next decade, the user cases and DApps derived from its technology may continue evolving indefinitely. All DApps operating on the platform require that Ether is spent as a transaction fee in the form of gas for it to function. The value of ether increases as the network continues to be adopted more widely.
In the year 2018–2019, two major software upgrades Sharding and Casper will be put in place to help with the scalability of transactions in the platform. The upgrades will increase transactions on the platform 1000x.
The platform still requires even greater scaling if it is to host DApps with massive popularity. It might also be necessary to check and ensure the security of the platform as it continues to grow. All said and done; the future is bright for Ethereum.
Resourceful links: Website | Whitepaper | Facebook | Twitter
Digital Asset Platforms Series (5 part series — Part 1): NXT Blockchain — What You Should Know
Digital Asset Platforms Series (5 part series — Part 2): What You Should Know About Waves Platform
Digital Asset Platforms Series (5 part series — Part 3): EOS Platform — What You Should Know
Digital Asset Platforms Series (5 part series — Part 4): Stellar Platform — What You Should Know
