Ethereum explained with the analogy of the Internet

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Sesterce

5 min readApr 26, 2022

Ethereum(not Bitcoin) is the most dominant cryptocurrency. ETH Daily Active Addresses more than BTC. The development team of Ethereum makes daily routine submissions that make it the busiest cryptocurrency that ranks #2 based on market capitalization.

However, it is not fair to compare BTC with Ethereum. Although both are based upon blockchain technology but are created for different functions. A small number of people understand what ETH can do for most it is no more different than Bitcoin. Those who use ETH as a product, or Dapps hosted on Ethereum do understand ETH with its purpose- which is a very small community in terms of number.
This limited awareness of ETH reasoned us to write this article to have awareness in the general public. Ethereum is not just about Hodl-ing or trading on exchanges.

Let’s Understand Ethereum as accurately explained with all it’s technical glory

Here is Vitalik Buterin lucidly explaining in the simplest way possible to him.

Some of us might have understood it, but some of us didn’t. Now Let’s try to understand it one more time:

The analogy of Internet to Understand Bitcoin, Blockchain, and Ethereum

Early internet

In the early days when the internet was new, there were only a few websites. People were getting the hang of the concept of a website, learning and using it. Initially, a huge number of plain business & information websites came into existence.

A chart showing the total number of live websites each year(Source: https://www.internetlivestats.com/total-number-of-websites/)

With time internet meant more..

Soon, a person got a light bulb moment and thought we should have a website where I should be able to buy stuff, (Jeff Bezos and Amazon) we call it eCommerce today. Then another person thought of having a website where I could chat with people online, so this led to the creation of chat websites(messenger).

Then somebody thought that there are so many websites, let’s make something which enables us to search websites(Search engines like google, duckduckgo) and so on and so forth.

Here is a table showing the growth of the internet:

Basically what we are trying to explain is that:

with time, with technological advancement, and with more adoption by the people, new use cases with practical applications of websites were thought of and were created over the internet.

A similar story with Blockchain

This is exactly what happened in Bitcoin or more accurately in the blockchain world. Initially, we all considered it only as currency with all its glorious benefits. It is decentralized, nobody has control, Immutable, etc.

An insane number of new coins were being created with more or less similar use cases(privacy coins, meme coins, etc.) you mine these coins, play with them, etc.

later a need was felt that we can or we should do more with this decentralized technology. Maybe A decentralized marketplace to sell digital products(OpenSea), finance applications to switch between digital currency, a crypto game where I can own digital assets. All these applications are decentralized.

But there was an issue: Decentralized requires adoption.

Decentralized App(Dapp) means applications are simultaneously running on thousands of computers(miners) across the world.

How do a thousand of these projects convince thousands of people(maybe much more than that) to adopt their product and run it on their own servers?

If you are wondering how it can be done
The short answer is you cannot!

between the journey of building the product, incentivizing the miners, and running the adoption: many promising products will fail in the midway due to such grueling labor.

Basically, a need was created, to have an easier path for Dapps to avoid a few of the steps while still being decentralized.

Ethereum a much-needed savior for Dapps

Enter Vitalik Buterin who thought about building a decentralized supercomputer(Or a blockchain platform) supported by miners across the world who will be providing necessary computational resources for these Dapps:

This decentralized supercomputer Ethereum will have it’s own programming language, called Solidity.
You as a developers can build your own application(dApps), coins, tokens using Solidity. Your application will run over the Ethereum network. You don’t need to worry about mining etc.
Ethereum has its own associated cryptocurrency/Token called Ether or ETH.
Ethereum users pay fees to use your dApps. The fees are called “gas” because they vary depending on the amount of computational power required.
Mining provides earnings for mining operators when new ETH is minted.

“Because [Ethereum] supports a programming language, developers have this unlimited creativity in what kinds of things that they actually create on Ethereum. So, you can use Ethereum to create cryptocurrencies, or NFTs, or many other kinds of things.”
Vitalik Buterin

Now that’s cool. With the help of Ethereum, blockchain was now not just limited to launching your own currency. It paved the way for Web 3.0.

The ecosystem is flooded with new products and solutions
Enabled massive adoptions due to novel solutions that blockchain offered.
Ethereum's success was validation for many and enabled the creation of a few more blockchain networks to support Dapps.

While all these things unfold an impending question arises is Ethereum a cryptocurrency?

Whether ETHEREUM is a TOKEN or a CURRENCY

Yes many of us do use Ethereum as a currency but it is intended to be a token. What Bitcoin does for money, Ethereum does for contracts. Ethereum’s innovation is that it allows you to write Smart Contracts: basically, any digital agreement where you can say “if this” happens, “then something else happens.” For example:

If I sign a contract on this document, then I own the painting, and no one else(does this ring any bells….NFT maybe) and no one else can temper the ownership.
Conventionally, these agreements were executed with a signature at the bottom of a paper document. Ethereum dramatically improves this model because it is digital, and proof of the transaction can never be deleted.

Here is a small comparison between Bitcoin and ETH for further clarity.