3 July 2020
Ethereum is an open-source, public platform based on the blockchain, which gave birth to the second-largest cryptocurrency in the world – Ether.
Ethereum is a distributed computing platform that uses blockchain to replace any internet third party that stores data or keeps track of complex financial instruments or transactions.
In this article, we are going to break down the basics of Ethereum for you so you can better understand this exciting new technology.
For starters, the goal behind Ethereum is to create a “world computer” that would decentralize the existing client-server models. This will allow for more democracy and control for clients and their online data.
Within the Ethereum network, the ordinary servers and clouds are replaced by nodes. These nodes are operated and maintained by volunteers scattered all around the world.
Essentially, Ethereum is designed to give you back in control of your data. In an Ethereum network, there is no single entity that has control over your information. The goal behind this is to make this sort of democratized and private environment available to everyone around the world.
How Does it Work?
What makes Ethereum different from other blockchain platforms is the fact that it is programmable. This means that experienced coders can use Ethereum to build decentralized applications, also known as dApps. These kinds of apps can benefit various types of industries, which is why they are highly sought after. In a nutshell, dApps combine the benefits of cryptocurrency and blockchain technology to allow for decentralized and transparent operations.
Nowadays, thousands of developers around the world are building applications on Ethereum solely for these reasons. What makes Ethereum special is that all transactions and processes on Ethereum are controlled and monitored by the community.
The way the monetary side of Ethereum works is quite simple. Just like banks use credit card codes to determine where the money goes once you swipe your card, Ethereum creates a string of numbers for identification. However, Ethereum creates a public and a private key, both of which are linked together by cryptography.
In order to spend the Ether coins, you have to enter your identification number, whereas, if you want people to send you Ether coins, you need to give them your wallet address. In a nutshell, this sounds just like any credit card out there or even the PayPal transaction system. However, what makes Ethereum transactions different is its blockchain foundation. Given that all transactions take place on the blockchain, they are much safer and cannot be tampered with, unlike traditional financial systems.
On top of that, Ethereum allows users to generate their identification number and make transactions whenever they want.
On Ethereum, this process is quick and straightforward. All you have to do is generate your ID code, which is usually a bunch of scrambled letters, and you’re good to go. This makes Ethereum a sound solution for those who cannot open a bank account for any reason, as well as people or organizations who want to make transactions outside of the shady and corrupt realm of modern financial institutions.
Ethereum puts you back in control of your money.