Introduction
Those of you who have heard about blockchain would have also heard about Ethereum because these are some of the most popular Technologies and keywords out there in the market today. In this article, I’m going to tell you what exactly is Ethereum. what makes it stand out among all the other implementations of blockchain?
Agenda
- What is Ethereum
- Features of Ethereum
- Smart contracts
- Decentralized autonomous organization (DAO)
What is Ethereum?
Ethereum is actually an open source public distributed Ledger system which is based on the original core blockchain idea itself. It also has a few additional features like smart contracts which is basically an application. When I talk about Ethereum one of the most fundamental and important questions that should come to your mind is How is it different from the Bitcoin blockchain?
Ethereum VS Blockchain
Let’s look at some of the key differences here concept or the core idea or fundamental idea which bought these implementations out in the world today. The core idea if most of you are not aware was to bring decentralized digital money into a world that was not governed by anyone and give the people the complete freedom to decide and work around it. There were a lot of challenges with respect to the existing monetary system which we’re not going to be discussing as part of the article. This was the core idea of implementing the Bitcoin blockchain. At the same time when you come down to Ethereum although it is a derivative of the Bitcoin blockchain. It’s often referred to as the second generation of blockchain because here people have understood what blockchain can be used for and have started using the various capabilities beyond the cryptocurrency market.
The core idea of Ethereum was to build a world computing system. This would be a decentralized Computing system where all the resources would be shared across as well as the Computing effort in itself would also be shared. It’s something that would be the world’s first decentralized distributed computing system. When you come down the original idea of blockchain was conceptualized in 2008 and the initial release was in Jan 2009 but Ethereum conceptualization started in 2013 and the first implementation came out in July 2015. Although the method of release of these coins was initially different whereas in Bitcoins you have the mind to get Bitcoins and in Ethereum, they came up with a monetary system which was basically through an ICO which is an Initial Coin Investment system. You hear a lot about ICOs and it’s something that’s gaining a lot of popularity so if you guys are interested in ICO do let us know maybe we can try and come up with an article on ICOs.
Now apart from this one of the other key factors would be the number of transactions each of them can process. Whereas Bitcoin blockchain can process only about three to four transactions per second. Ethereum blockchain can process about 15 transactions per second and again the time that is taken for creating a block also is slightly different an average Block in blockchain gets created every 10 minutes whereas in Ethereum it’s about 12 to 15 seconds. The Reward system is also quite different whereas in blockchain it’s about 12.5 Bitcoins in Ethereum it’s only about five ethers. Let’s look at some of the key features which make Ethereum so popular, and effective.
Features of IOTA
Crypto Currency
Ethereum is a blockchain-based implementation thereby it does require any form of the monetary system thereby you have its own internal cryptocurrency which is ether.
Smart Contracts
A smart Contract is basically an application that would run on a blockchain and process all the information present on the blockchain.
Decentralized Autonomous Organization
A decentralized Organization is an organization that broke the foundational knowledge of a governing organization.
Smart Property
It also helped to introduce the concept of smart property wherein you could digitally transfer your property without having to face any of the hassles of exchanging the property or validating the documents as well. let’s talk about each one of them one by one.
What is Ether?
Ether is a cryptocurrency that you would be seeing out there. which is actually listed as ETH on most cryptocurrency exchanges and this is something that’s getting a lot of popularity recently.
- The value token of the Ethereum blockchain is called Ether, listed under ETH on cryptocurrency exchanges
- It is used to pay for transaction fees and computational services on the Ethereum network
- Every time a contract is executed, Ethereum consumes tokens which are termed as ‘gas’ to run the computations
Why a separate cryptocurrency when there were Bitcoins already?
The idea here is to provide for the transaction fees as well as the computational service that you would run on the Ethereum network. There are various applications that will be running on this network people put a lot of information. People can customize the Ethereum network for their needs and Necessities as well. For all the operations that you would be running there would be some amount of tokens that are going to be consumed to perform these computational so these tokens are generally referred to as “gas”
What is Gas in Ethereum?
Gas in itself is something that you pay for. Basically, the Transaction fees that you would be charged would be for purchasing that gas. Any sort of competition that you want to perform you need to buy gas and that’s where Ethereum comes. So if you want to perform any operations on Ethereum you need to buy gas which is basically going to be deducted in form of ether. Now if you’re providing a high transaction fee then basically the chance of your operation getting completed faster would be high. This is something that miners would take as a profit. Let’s say if you provide too little gas then the transaction in itself May Fail as well. It’s completely left off due to deciding on the gas used for your computational process.
What are Smart Contracts?
A smart contract basically is a computerized transaction protocol that in turn executes a term of a protocol. In terms of a simple word “it’s basically an application wherein you write a standard contract rule and it gets executed without having any change because anything on the blockchain is completely immutable” This is something that is the core Foundation of blockchain. If I try to even manipulate a contract it is not possible.
Let’s take the example of “Ram and Shyam who actually have formed a physical contract and they’re trying to put the information on a permission blockchain this, in turn, would actually lead to a Smart contract.” Now to give you another simple example let’s say “I’m buying a house from either of you. What happens is that you give me the money and finally I decide not to transfer the property then it becomes a loss for you because firstly there could be a challenge that I would say that I do not receive the money or something like or any situation like that this can be completely avoided.” Firstly by putting it on blockchain because the transaction that I would be taking from you would be completely visible and I can ensure and blockchain itself is immutable so this cannot be rejected or it cannot be falsified as well.
Apart from that let’s say I am going to write a smart contract that says “Once I have received the money from you transfer the property from me to you.” That would get automatically executed when I would have confirmation of payment from you. So this gets executed but let’s say if I write the condition that only and only if I get 5000 ethers will I transfer the property then what would happen is until and unless I get that 5000 ethers the transaction would not take place. That is the contract would not get executed as well. So this in turn also ensures that falsification from both ends is not met. So this is something that’s quite realistically and since it’s out there and opens wherein no humor intervention can manipulate it this becomes a trustless system. When you don’t have to put your trust in someone else thereby making it quite easy for operations to work and quite transparent as well. For those of you who are looking for an opportunity in the blockchain domain, this is what you need to look out for. Because today there is a huge demand for people who can’t write smart contracts as such.
What is Solid Language in Ethereum?
Solidarity in itself is one of the most popular programming languages for writing smart contracts on the Ethereum blockchain.
What is a Decentralized and Autonomous Organization (DAO)?
Dao’s are basically organizations or groups of people who completely exist entirely on the blockchain itself and are governed by the various Protocols of the blockchain. What you need to understand is that blockchain is an open-source technology that can be manipulated as per the user’s requirement.
Let’s say I’m forming an organization of various people. I can ensure that we come to a common understanding and then I can build this organization. First I Define these protocols, I create an understanding and then I create this organization, and then what I can do is basically I can create a Union of multiple long-term smart contracts which are present between these people itself. Any decision that needs to be made or any operation that needs to be done would all be written in smart contracts and these all would come together as well. Basically what they are is they are designed to hold on to the assets and use them in form of a voting system and manage their distribution.
How Does Decentralized and Autonomous Organization (DAO) Work?
let’s say if there is someone who holds major assets then he would have a higher priority as well. Again two or more entities within the DAO itself can interact with each other in a fully decentralized and automated fashion. Any communication thereby also is completely possible and this is something that definitely happens on a regular basis. In order what you need to understand is that each action or vote is represented by some form of transaction in that blockchain itself.
What you need to understand is that in case any operation needs to be done it will be in form for the transaction. To give you a quick idea a group of people come and write smart contracts that govern that organization people actually add funds to this Doc and are given tokens to represent their ownership. So the more you invest more tokens you hold, and when the DAO begins to operate each member proposes how to spend this money. Based on the votes of the members The Proposal status is decided as such. What you need to understand is that this is how going forward most organizations will definitely work out because this makes it quite easier and also at the same time you do not need to depend on a third party, you do not have to have the trust factor to go forward. Thereby making it quite easy and effective as such okay so with this we come to a conclusion of this article.
If you are interested to learn more about Ethereum feel free to write that in our comment section and if there’s something more that you would like to know about any of the blockchain implementations please post that in our comment section below so with that thank you and goodbye.