What is Ethereum?
In their most abstract form, blockchains are a new way of organizing economic, social, and political activity. Blockchains are an institutional technology - more similar to markets, corporations, and nation-states, than just mere computing platforms.
Fundamentally, blockchains allow millions, if not billions of independent, diverse, and untrusting participants to coordinate on a global scale. And perhaps equally important, blockchains are sovereign entities, free from outside interference and unable to be shut down.
The first instantiation of blockchain technology was Bitcoin, which incentivizes participants to contribute computing resources towards maintaining a global ledger of transactions. This ledger is the ultimate source of truth containing a full history of who spent and who owns what. An innovation that alone created the world’s first scarce digital asset, bitcoin.
Since the invention of Bitcoin, blockchain technology’s use has been expanded beyond the maintenance of a transaction ledger. The most prominent example is Ethereum, which not only maintains a ledger of transactions but also stores and executes arbitrary code, thereby opening up an infinite number of potential use cases.
Ethereum was birthed out of the idea that blockchains could power more than just decentralized money. Blockchains could, more expansively, power an entire decentralized global economy. The ultimate vision for Ethereum was to become the world’s computer. Seven years after conception and five years after main net launch, Ethereum now hosts tens of thousands of applications, $100+ billion in assets, and settles more than $1 trillion in transactions annually, making it arguably the most used blockchain in the world. It also underpins a burgeoning ecosystem of composable and symbiotic decentralized finance protocols termed “money legos” as well as the majority of the industry’s stablecoin activity.
What Is Ethereum
Ethereum in a nutshell is a blockchain-based software protocol that supports the second-largest cryptocurrency by market cap, but more importantly, is the number one blockchain most used by software developers.
Like its big brother Bitcoin, Ethereum can be used to send and receive value via its native token Ether or more commonly known as ETH. There are also several interfaces built into the protocol such as ERC-20 and ERC-721 which are also token types that can be sent to other people or smart contracts.
How is Ethereum Different From Bitcoin
As a blockchain-based platform, Ethereum and Bitcoin are quite similar in the fact that they both keep track of users’ balances and who sent what to whom. However, that is where the comparison stops, Bitcoin has been notoriously hard to write programs for and was the initial reason why Vitalik Buterin created the Ethereum concept in the first place.
What is This World Computer Concept
Our current internet infrastructure is run primarily by third-party corporations, who give users access to free software in return for their data. This data is then used by advertisers who target these users based on their interests, demographics, and previous searches.
It has proven more recently that the trust given to global internet organizations has been eroded time and time again and users have opted to take back control and have begun to look for alternatives to third party providers.
Blockchains work on the principle of decentralization which Webster defines as “the dispersion or distribution of functions and powers.” blockchains aim to put the power back into the user’s hands. Allowing individual sovereignty over their money, and data puts a user in control of their most prized assets.
How Does a Dapp (Decentralized App) Work
On the surface many Ethereum applications strive to look just like the existing web services and mobile applications you use today, however, the difference lies under the hood, which gives users the ability to port their data, and history over to other decentralized apps if for instance, the owners of the original app stop working on it, or if the service is taken down by malicious actors, the progress and achievements gained by the user are not lost.
With Ethereum smart contracts performing the backend administrative duties, fast, native payments, and decentralized storage of front-end user interfaces the ability for unstoppable applications to come to the forefront is very much a real milestone currently in progress.
How To Use Ethereum
Ethereum is still in its infancy stage and developers aim to make dapps that are indistinguishable from the Web 2.0 software in use today. The biggest difference between Web2 and the decentralized Web3 is the need for a wallet that is the equivalent of your user account. A long hexadecimal string of characters represents your public key or account number, and only you the user has the private key to this account, not even the application or website you are using can steal funds, or your data.
You Need A Ethereum Wallet
Wallets come in a variety of flavors from desktop wallets like the Chrome extension Metamask who has over one million daily active users, allow you to interact with any dapp on the public network but also test networks as well.
Due to the power of modern smartphones, most new users will want to download a mobile wallet that holds your cryptocurrencies but also digital collectibles, digital art, or virtual land. MetaMask, Argent, AlphaWallet, or Coinbase Wallet all offer iOS and Android versions of their apps, allowing anyone in the world to get started on the Ethereum blockchain.
Another way of storing your tokens is what’s called cold storage or hardware wallets such as the Ledger Nano S, or Trezor. These are physical devices that allow you to transact without needing to have your wallet connected to the internet at all times. Hardware wallets are some of the most secure methods of storing ETH and associated assets for years to come.
Lastly, if you are strapped for cash and want to keep your coins offline you can print out a paper wallet that has your Ethereum account number, private key, and a QR code so that you can send yourself tokens but can’t spend them unless you move the private key to an internet-connected device.
Now You Need Some Ether
Once you’ve gotten yourself familiar with the basics now it’s time to procure yourself some ETH as it’s the primary method of transacting. Smart contracts need gas to run and ETH is that gas to interact on the Ethereum network, and dapps.
You can buy ETH on any one of the online outlets, paying close attention to your country of residence, as not all exchanges operate in jurisdictions outside of their own. Binance, Coinbase, and Kraken are some of the most popular exchanges in the USA, UK, and China excluding Coinbase.
You deposit fiat currency into the exchanges and once your deposit is confirmed you can input the amount of cryptocurrency you like. Once the transaction has been confirmed you can then either keep your tokens in the exchanges but are recommended to move your assets to a wallet you control.
If you absolutely can’t or don’t want to purchase online, you can buy offline either in-person meeting up with someone who has crypto they would like to sell for fiat or you can purchase at any one of the local ATMs in your area.
What Can You Do With That New ETH
Blockchain platforms open up an infinite possibility in all facets of society, such as decentralizing existing web2.0 internet services, permissionless gaming, the tokenization of every single asset on the face of the planet. However, there are a few verticals that are well suited for blockchain networks.
Blockchain Games
Racing virtual horses, using footballers in a trading game, or building your utopia in a virtual world, Ethereum is ushering the ability for players to truly own their digital creations, achievements, and milestones. These same assets can now be resold on marketplaces or cross utilized in other blockchain-based games.
Art & Collectibles
Due to the ease in which it is to copy any digital assets they need to prove ownership, provenance, and creation when it comes to digital art, 3D animations, or mixed media. The tokenization of digital assets will finally allow creators to earn what they are worth.
DeFi
Decentralized Finance is taking the crypto world by storm, traditional financial services are being unbundled and streamlined to enable access to services historically out of reach for the 3.5 billion unbanked people across the globe. Loaning yourself capital against your digital tokens is only the beginning of what the world of DeFi has to offer the citizens of the world.
Conclusion
The Ethereum network launched in July 2015 and with it brought forth a new paradigm of computing but also the way strangers will conduct commerce, communication, and collaborative efforts for decades to come. Giving people back the power to control their data, finances, and accomplish goals that further mobilize them towards a life of opportunity and progress.
