Ethereum for dummies

14th March 2016

To put it in simple words, Ethereum is a decentralized platform for running smart contracts. Smart contracts are applications that run just the way they are programmed, with virtually zero possibility of any censorship, fraud, third party interference or downtime. Ethereum was crowdfunded in the year of 2014 from its fans all over the world, and was developed by a Swiss nonprofit organization, the Ethereum Foundation, in collaboration with some of the greatest minds from around the world. Before talking about Ethereum in detail, knowing more about the three commonly used terms in the Ethereum environment will be helpful so let us get into that.

1.    Smart Contracts

As the name suggests, these are contracts but not in the way we normally think of a contract. A smart contract is a computer protocol/program, which automatically executes the contractual part corresponding to the condition that is fulfilled. With smart contracts, you are looking at an incorruptible system of enforcing contracts, thus eliminating the risks of delayed payments and bringing down the risk of non-performance by over 80%.

2.    Blockchain

The Blockchain, being the most talked-about subject in Ethereum and other cryptocurrencies like Bitcoin, is nothing more than a distributed database. It has data records, is growing continuously and also is protected against any form of revision and tampering, even from its own operators. A blockchain, unlike traditional server architecture, does not go down if a single node is compromised or goes offline. The user data is private and apps remain decentralized, working just the way Internet was supposed to do.

3.    Ethereum Wallet

The Ethereum wallet acts as a gateway for DApps or Decentralized Applications that work on the Ethereum Blockchain. It holds ether, amongst other crypto-assets that are built using Ethereum. Smart contracts can also be written and deployed using the Ethereum wallet.

What is Ethereum capable of?

With Ethereum, anyone can design and use his or her own cryptocurrency, which can further be used either as a currency or to represent a share or any asset amongst other things. With a standard API, the contract from these tokens will work with any kind of wallet, contracts or even exchanges. It can also help projects get funding through smart contracts.

Is the world accepting Ethereum?

For anyone familiar with Bitcoins, the hesitation that the public has in using it is obvious. This is what has been pushing Ethereum forward; not only as an alternate cryptocurrency but also as a new platform to build better products and applications. For instance, there is an Ethereum project being developed at present that will connect 11 different banks of the world in their own B2B Platform. And another one is automating factories for ensuring better usage of resources, and reducing labor and shipping costs to make them more efficient.

By now, anyone who was not even familiar with Ethereum first will have learnt enough to know as to what makes it not just another cryptocurrency, but a platform that can be used to drive change and innovation in the world.

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