Ethereum platform is one of the famous cryptocurrency. It is held second to the Bitcoin’s value. However, when it comes to features, it easily beats Bitcoin. But, that’s not what we are going to focus today. Today, we will focus on Ethereum and understand how it works.
At the time of its launch, many were also skeptical about how Ethereum. That’s why we will also try to answer the question, “Does Ethereum work?” Let’s get started.
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What is Ethereum?
Image credits: Ethereum
To get a better understand, we first need to understand Ethereum platform. It is a platform that enables decentralized apps (Dapps) to run. The best analogy is “The Internet.” Just like the internet, it is distributed. But it gives us more security, transparency, and scalability. The Ethereum blockchain consists of nodes that take part in achieving consensus and other platform related activities. The whole infrastructure works in a way that Dapps can be hosted and run on it. That’s why you will see Ethereum flourish so much recently. Projects such as EOS, TRON, and so on.
It was created in 2015 by Vitalik Buterin, a Toronto-based programmer. He also released a token associated with the network. It is known as “ether.” Ether acts as the fuel to run the network.
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Speculations on Ethereum when it was first released
When the idea got announced, there were huge speculations on what Ethereum network is going to be capable off. However, the skeptics and speculations slowly went down with the release of public testnet. The testnet was capable of running DAOs and quasi-turning complete smart contracts.
At that time, JavaScript API for Ethereum was also in works, solidifying its hold after its launch. To ensure that bugs are churned out as quickly as possible, they also released bounty for bug hunting.
Soon, v1 clients were served with the help of Mist browser and Ethereum GO.
How does Ethereum work?
Ethereum network enables developers to develop apps for the blockchain. In comparison, Bitcoin doesn’t do that. The apps can work on their own and bring outcomes that are predefined by the programmer. The software that enables that kind of behavior is known as smart contracts.
Smart contracts are similar to legal contracts that work in the real world. It is just that developers now have the ability to write contracts with code. That’s groundbreaking as it can automate tasks on the blockchain. Smart Contracts also benefit from other blockchain properties such as integrity, transparency and in some cases privacy.
Let’s take an example to get a better understanding. A friend wants yours wants to send you tokens that he created. The rate he chose is 5000 tokens for one ethereum. To prevent any manual work, he can write a smart contract and then ask you to send the said amount. Once the address where the tokens are stored receives the ether, it will automatically send the right amount of token to your friend. It automates everything, and that’s the beauty of smart contracts.
Another feature of the Ethereum blockchain is the Dapps. They are decentralized apps that work on the blockchain. It just like simple apps that run on the blockchain. Let’s explore it by comparing it to smart contracts.
Smart contracts vs Dapps
Image Credit: Ethereum
The main difference between Dapps and smart contract is that of an interface. Dapps lets the user connect with the blockchain. Also, Dapps have unlimited capacity compared to smart contracts. Dapps can have many usages compared to smart contracts only commercial usage.
ICOs on Ethereum Platform
Initial Coin offering(ICO) is used by startups to raise money. By doing ICOs, startups sell their tokens to the public or private investors. Ethereum network due to its capabilities is perfect for startups to create and release tokens. There is also the ERC20 standard that ensures that tokens released on the blockchain meet a certain standard.
Ether: Fuelling the platform
Ether is different from Ethereum. It is a cryptocurrency that fuels the whole network. It also fuels the Dapps and gives the developers incentive to create Dapps. At the time of writing, the value of 1 ether is around $600. It went as high as $1300 in December 2017.
Does Ethereum work?
So, does ethereum work? Of Course, it does. Does it work as intended? Yes. Ethereum is the workhorse of the blockchain revolution, and things will only evolve from here. In comparison, Bitcoin is only seen as value storage.
So, what do you think about Ethereum? And, do you think that it works? Comment below and let us know.
