Ethereum Oversimplified: A Beginners Guide to Ethereum

By now, the whole world has heard about the most famous cryptocurrency out there, Bitcoin, the cryptocurrency with the biggest market capitalization. However, Bitcoin is not the only cryptocurrency out there; there are thousands of cryptocurrencies out there which Ethereum, as mentioned in the title, and what this article is going to be about is ranked the second by market capitalization and plays a huge roll in the cryptocurrency market.

To start off, let's discuss a little about how Ethereum was created and by who.

In 2013, a young genius named Vitalik Buterin had an idea, which he discussed it with his friends in a white paper, after his idea got around, around 30 people approached him to discuss this new concept, even though he was expecting criticism and people pointing out mistakes on his work, it never happened. After a while, during the january of 2014, this project was publically announced.

To understand Ethereum in entirely matter, how it can potentially impact our society and what it is its purpose, it is essential to understand what its main elements are and what’s the difference between Ethereum and the others.

To start, Ethereum is Decentralized, which means it is not controlled by any single governing entity. Most businesses, enterprises and online services are built on a centralized system of governance. Ethereum, being a decentralized system, is not controlled by anyone at all and is fully autonomous. It is being run by thousands of volunteers with their computers around the globe.

Secondly, many people confuse Bitcoin and Ethereum on being the same thing. However, they are very different with very different goals, bitcoin was the first ever cryptocurrency out there, with the foundation of it being blockchain technology and fully supported by it.

Ethereum took this technology and expanded its capabilities substantially. Ethereum is a whole network, with its coding language, payment system, and Internet browser. And above all, it allows users to create decentralized applications on Ethereum’s Blockchain.

In short, Ethereum is a public, open-source, Blockchain-based distributed software platform that allows developers to build and deploy decentralized applications.

As mentioned above, Ethereum is decentralized, which means it works with a peer-to-peer approach. All the interaction that happens is supported by only the people taking part in it, with no authority being involved and controlling it.

The Ethereum system is entirely supported by a universal system that is called ‘nodes.’ Nodes are made up by people who download the entire Ethereum’s Blockchain to their computers and fully enforce all the consensus rules of the system, working on the network and gaining rewards by doing so.

These transactions that are agreed upon with their own accepted rules, as well as numerous other aspects of the network, are made possible by ‘smart contracts.’ Smart contracts purpose is to perform these transactions automatically. The completion of these terms then triggers a deal or any other specific action. A lot of people believe that these smart contracts are the future. Moreover, many think that they will replace all other contractual agreements since smart contracts are more secure compared to traditional contract law. Besides, they reduce transaction costs associated with contracting and establish trust between two parties.

Is Ethereum a cryptocurrency?

Ethereum is much more than just “money,” it is a software platform that aims to act as a decentralized app store as well as a decentralized Internet. And of course, a system like this would need currency for all the resources required to run a program or an application. And this is what “Ether” is for.

Moving forward, Ether is a digital asset which does not need a third party to process the payment. Moreover, it is not only digital currency, but it is also required for the apps within the Ethereum network When anyone wants to change anything within the apps, an amount must be paid for the transaction fees in order for the system to process the change.

Reference List:

What is Ethereum. Guide for Beginners. (n.d.). https://cointelegraph.com/ethereum-for-beginners/what-is-ethereum#how-ethereum-works

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