What is Ethereum?
What is Ethereum after all? We can see, it is the second-largest cryptocurrency around but the term seems confusing. Is it as revolutionary as Bitcoin? Can this technology really change the workings of the world? It seems to be a lot of complex technical gibberish to understand so let's make it easy.
Before Bitcoin, the only way to use money digitally was via an intermediary for eg: through a bank or PayPal. Even then the money was still government-issued and controlled currency. However, Bitcoin changed that creating a decentralized form of currency wherein individuals can trade directly without the need of an intermediary. Now that you know money can be decentralized the question that it begs is, what other functions of society can be served better with a decentralized system? What about voting, real estate records, or decentralized social media?
In order for a system to be truly decentralized, it needs a large network of computers to run it and so the Ethereum network was proposed. It was proposed in 2013 and brought to life in 2014 by Vitalik Buterin. Ethereum is a Do-It-Yourself platform for decentralized programs also known as Dapps. Ethereum is written in the "Solidity" programming language and has thousands of independent computers running it. Once a program is deployed to the Ethereum network, these computers also called nodes, will make sure it is executed as written. Ethereum is not currency though, it's a platform. The currency used to incentivize the network is called Ether. Ethereum's goal is to truly decentralize the Internet.
When you use the internet, there’s almost no activity on it that happens without some sort of intermediary or 3rd party. Ethereum allows people to connect directly with each other without a central authority to take care of things. It is a network of computers that combine together into one powerful decentralized supercomputer.
Ethereum's coding language solidity is used to write "Smart Contracts" which is the logic that runs Dapps. In reality, what a contract is, is a set of 'ifs' and 'thens' which means a set of conditions and actions. For eg: if you pay $10 to a shopkeeper for chocolate, he lets you buy it. Ethereum programmers write the conditions for their Dapps, and the Ethereum network executes them. These smart contracts deal with every aspect of the contract such as enforcement, management, performance, payment, etc. A downside to this is that a smart contract is not intelligent at all. It is uncompromisingly lettered and strictly follows every rule written in it. Once a smart contract is deployed on the Ethereum network it cannot be edited or corrected even by its original author basically making it immutable. With any contract the more complex it is, the harder it is to secure it because it requires perfect accuracy to make sure it only performs the functions the author intended.
All these complex procedures cost money. Money to get the machines, to power them up, store them securely and cool them if needed and hence 'Ether' was invented. When people talk about the price of Ethereum, they're actually referring to the Ether, which is used to incentivize people to run the Ethereum protocol on their computer. This is very similar to the way Bitcoin miners get paid to maintain the Bitcoin blockchain. In order to deploy a smart contract to the Ethereum platform, its author must pay to do so. This is done so that people will write optimized and efficient code and won't waste the network’s computing power on unnecessary tasks.
The use of the Ethereum network has grown immensely over the years and we will be seeing new technologies being built and formed over the Ethereum network which may introduce us to a whole new world or even a new type of internet where every user will have complete autonomy.
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