If you wish to know the details of Ethereum without delving into highly technical depths of it, this is your best option. It is vital to understand the basic underlying principles of the working of Ethereum and how it is different from other cryptocurrencies. Just like Bitcoin, Ethereum uses the technology of blockchain and is an open source platform enabling distributed computing to feature smart contracts. These smart contracts run exactly as programmed and do not fall prey to any network downtime, fraud, system failure or third party interventions.
Blockchain has been reconfigured to allow developers to build smart markets, store logs of liabilities and move capital in accordance with long given instructions. This powerful shared global infrastructure helps in exchanging value and displaying ownership. Developed voluntarily for Ethereum Foundation, a Swiss non profit organisation, this platform is supported by several operating systems including Linux, Windows, MacOS, POSIX, Raspbian. Applications such as electronic voting, trading, digital record of property assets are being developed and deployed at faster rates and brilliant customer satisfaction.
In even more simpler words, Ethereum is an open source and public platform developed upon the concepts of blockchain to help users create smart decentralized applications.
Both Bitcoin and Ethereum are decentralized, distributed open source, public blockchain networks however, there are major differences in its potential and purpose. Bitcoin is a peer-to-peer electronic cash system that enable transactions and purchases via Bitcoin payments. The Distributed Bitcoin network keeps a track of the ownership of each and every Bitcoin in the community. On the other hand, the focal point behind the concept of Ethereum is to run the programming code of a decentralized application. Just like E-mail was one of the most particular and spectacular use of the Internet, it wasn’t the only use and many more applications were developed based upon its concept. Similarly, Bitcoin was the foremost application of the Blockchain technology but isn’t the only one application.
In the Bitcoin community, Bitcoins are mined. However, a different form of cryptocurrency is used in Ethereum called Ether. Users do not mine Ether but earn them and make transactions and purchases on the Ethereum network using this Ether. Settlements on Bitcoin take an average of 10 minutes to pull through, however, Ethereum aims at an even faster processing time of just 12 seconds. Unlike Bitcoin mining which has a notoriously energy consuming process and is recommended only on industrially large scales, Ethereum works on a ‘proof of work’ algorithm which enables and encourages even individuals towards decentralized mining.
Another feature to take note of is that the internal code of Ethereum is Turing complete. In simple terms this means that as long as one has enough computer power and time anything on the network can be computed. This gives developers innumerable possibilities to work with.
Ethereum in itself is not a digital currency but an open source decentralised platform which no single point of control. All operations are not run by a central governing authority but a group of volunteers all around the world. The computational asset used to pay for services on this network is Ether. Not only are transactions settled using Ether, but it is also used to make any changes in any applications on the Ethereum network. This is a sort of transaction fees one needs to pay for successful processing of changes and thus Ether acts as a ‘fuel’ in the Ethereum network too.
Owing to the decentralised nature of the Ethereum network, it is immutable. Censorship is impossible and it is corruption and tamper proof. With no point of central control and secure cryptographic methods used, it is immune to fraud and hacking activities. The distributed network is run by a group of dedicated volunteers worldwide owing to which there is no scope of network downtime or network failure.
Any and all centralized service or application can be turned into a decentralized application. The only limitation one encounters while working with Ethereum is their own personal creativity. Anything from bank loans to voting systems and regulatory compliance and much more can be executed on Ethereum. One can also build a DAO – Decentralized Autonomous Organisation. Run on an ensemble of smart contracts written on Ethereum’s blockchain, DAOs are run on a code which replaces a traditional structure. This eliminates the need of a single regulatory body.
A smart contract is simply a code which enables exchanges with respect to money, property or anything that holds some value on the Ethereum network. Once run, it acts like a self operating program when required conditions are favorable. Ethereum gives its users the flexibility of doing whatever sort of operations they wish to.
If one has educated themselves with the basic working and principles of Ethereum (which is the most important step before starting any venture), one would now obviously want to know where they could actually do all this work.
One of the simplest ways to get started is using the ‘Mist’ browser. Not only does it provide a user friendly interface to build smart contracts but also provides you a digital wallet. A digital wallet or Ethereum wallet is where one holds and secures their Ether and/or other digital assets that have been developed using Ethereum which are basically your smart contracts. Needless to say, it is important to keep the private key of your digital account wallet in a safe and secure location to avoid any unfortunate incidents.
Another option available is the MetaMask browser extension available on Google Chrome. One could easily get it from the Chrome Web Store here.
The next obvious step for a user would be to learn about how to get Ether. One of the most easiest and convenient sources to buy Ether is from a cryptocurrency exchange. There are several options one could explore such as Bitstamp, Coinsquare, Coinbase, Kraken, Cex.io, Shapeshift, Poloniex, Coinmama. It is important to choose the exchange which falls under your area of jurisdiction i.e. one which is not illegal in your country since you wouldn’t be wanting to face any criminal charges. Simply set up an account on either of these exchanges and use you money – hard cash via wire transfers or money in your bank accounts, to buy your Ether tokens. Always make sure that you store your assets in a secure digital wallet which is mostly always provided by these exchanges too.
One could also get their Ether tokens via peer-to-peer trading or by mining. However, the supply of Ether is virtually unlimited unlike Bitcoins (where only 21 million Bitcoins are available), users usually get their Ether tokens via a secure exchange. Once you have as many tokens as you wish or require, you can start building your own decentralised applications on the Ethereum platform.
Ethereum has slowly gained mainstream attention and more and more people are now actively considering building smart contracts using this decentralised platform. Ethereum is an invention which is here to stay and would soon change the way the Internet works. Ethereum is set to revolutionise the way industries work and the way services and products are provided to their users.
If one is still unsure about working with the Ethereum platform, there are several online courses one could make use of. Blockgeeks is one such option one could look into for assisted guidance. There have recently been several books in both paperback and Kindle editions, which could guide you and clear your doubts regarding Ethereum. Introduction to Ethereum and Solidity by Chris Dannen, Ethereum: A look into the world of Ethereum and how to trade and invest this cryptocurrency! by Ben Abner, Investing in Ethereum: The Ultimate Guide to Learning and Profiting from Cryptocurrencies by Oscar Flynt a few books one could look into.