What is Ethereum (ETH)? Beginner Guide

1 What is Ethereum?

Ethereum is a Cryptocurrency that is decentralized and has all the facilities as bitcoin has.

It is a  popular open-source, public, blockchain-based distributed computing platform and operating system is known as Ethereum and is based on the use of tokens, which can be bought, sold, or traded.

Today, most of our personal information, passwords, and financial information are stored on other people’s computers in the cloud and on corporate servers like Amazon, Facebook, or Google. 

Information is stored on a server controlled by a company that charges to hold this data. This configuration provides a number of benefits as these companies deploy specialist teams to store and secure that data and reduce the cost of hosting and availability. But with this handiness, there is also a vulnerability. We have learned that a hacker or a government can get illegal access to your files without your knowledge by influencing or attacking a third-party service.

Brian Behlendorf, who created Apache web server, has gone so far as to label this centralized design as the “original sin” of the Internet. Similarly, people argue that the Internet always targets to be decentralized, and a movement has emerged using new tools, including blockchain technology, to help achieve this target.

Ethereum is one of the newest technologies to join this revolution. While bitcoin aims to unsettle PayPal and online banking, Ethereum aims to use a blockchain to substitute third parties on the Internet: those that store data, transfer mortgages and track complex financial instruments. In short, Ethereum wants to be a “world computer” that decentralizes the existing client-server model. 

Servers and clouds are being replaced by thousands of so-called “nodes” operated by volunteers from around the world with the use of Ethereum. Ethereum would return control of the data of this type of service to the owner and the creative rights to the author. The idea is that an entity cannot have control over your notes, and no one can suddenly lock the app itself, temporarily taking all your notebooks offline. Only the user can make changes, no other entity can make changes.

In theory, it combines the control that people have over their information in the past with the easily accessible information that we are used to in the digital age. Each time you save edits, add or delete notes, each node in the network makes the change.

Although applications seem to be possible, it is not clear which blockchain applications will really be useful, secure or scalable, and if they will ever be as convenient to use as the applications we use today.

2 Creator of Ethereum?

The main idea of Ethereum was created by “VITALIK BUTERIN”.
And the other two persons who are involved in the ethereum project are “JOSEPH LUBIN” ( co-founder) and “GAVIN WOOD”.

Most of the people shocked when they found VITALIK gets an idea of ETHEREUM at that time his age was only 19 years old.

Vitalik pointed out the limitations and problems that were in bitcoin and made the plan to create a new cryptocurrency named ETHEREUM.

3 History of Ethereum

Ethereum was introduced by Vitalik Buterin, a programmer engaged with Bitcoin Magazine, in late 2013 with a target of building decentralized applications. Vitalik Buterin had argued that scripting language was needed for application development considering Bitcoin. He suggested the development of a new platform with a more general scripting language. The announcement of Ethereum was done at the North American Bitcoin Conference at Miami in January 2014. Gavin Wood, Charles Hoskinson, and Anthony Di Iorio financed this project.

The basic idea of including executable smart contracts in the blockchain had to be established before the software could be implemented. This work was carried out by Gavin Wood, then technology director, in the Ethereum Yellow Paper, which specified the Ethereum virtual machine.

A Swiss-based non-profit foundation, The Ethereum Foundation (Stiftung Ethereum) was also established in 2014. The development was funded from July to August 2014 by a public online crowd sale in which participants purchased the Ethereum Value token (ether) with another digital currency, Bitcoin. While Ethereum’s technical innovations were praised early on, questions about their security and scalability were also raised.

4 What Is Ether?

 Ether is a basic token for the operation of Ethereum, which therefore provides a distributed general ledger for transactions. It is used to pay for gas, a computational unit used in transactions and other state transitions. This currency is also incorrectly referred to as Ethereum.

It is listed under the ticker symbol ETH and is traded on cryptocurrency exchanges. The currency symbol is usually the Greek capital letter Xi (Ξ). It is also used to pay transaction fees and billing services in the Ethereum network.

5 Is Bitcoin similar to Ethereum?

Ethereum and Bitcoin may be somewhat similar in terms of cryptocurrency, but in reality, they are two completely different projects with completely different goals. While Bitcoin has established itself as a relatively stable and successful cryptocurrency, Ethereum, with its digital currency ether, is a multi-purpose platform that is just one component of its smart contract applications.

6 What Is Different In Ethereum?

As all of us know that ethereum is a cryptocurrency, so surely every one of us knows very well that what are advantages of it to have it. Besides the use of ethereum as a cryptocurrency, there are numbers of advantage that we can have that is the main reason for an increase in demand for this cryptocurrency.

7 ERC-20 Tokens

Ethereum provides a platform to create their own tokens with their own properties and set of rules. It only needs a very little programming knowledge and skills to create an ERC-20 token. There are many ICOs coming that are based on Ethereum blockchain. With this option, we can make our own coin token with a small amount of fee and for this, we don’t need any type of paperwork.

8 What Is ERC-20 Token?

Ethereum uses tokens, which can be bought, traded, or sold. One of the most significant tokens in Ethereum is called ERC-20. It has become the technical standard for all smart contracts in Ethereum Blockchain for token implementation. As of April 16, 2019, there are more than 181,000 ERC-20 compatible tokens in the main Ethereum network.

The ERC-20 is critical because it defines a common list of rules to which all Ethereum tokens must comply. As a result, this special token allows developers of all types to accurately predict how the new tokens will work in the larger ethereum system. This simplifies the tasks of developers by allowing them to continue working, knowing that not all new projects must be recreated each time a new token is launched, provided that the token integrates with the rules.

 Fortunately, the vast majority of token developers have so far adhered to the ERC-20 rules, which means that most of the tokens issued by the original Ethereum coin offer comply with ERC-20.

Today there are a lot of ERC-20 tokens exists in the market that is used and developing continuously every day where some Examples of the popular ERC-20 tokens are 0x (ZRX), Augur (REP), OmiseGo (OMG), TrueUSD (TUSD), Basic Attention Token (BAT), Maker (MKR), Edge (DADI), Quant (QNT), Loom Network (LOOM), etc.

9 ERC-20 Specifies Six Functions 

ERC-20 token defines six different functions for other tokens in the Ethereum system. These are some basic functionality issues, generally including the method by which tokens are transferred and how users access data about a particular token.

Together, these features and signals ensure that Ethereum tokens of different types work consistently throughout the Ethereum system. Almost all digital wallets that support the Ether currency also support ERC-20 compliant tokens. But since the ERC-20 standard is still relatively young, there are likely to be bugs that need to be ironed out as Ethereum continues to mature.

To give an example of such an error: Ethereum tokens that are sent directly to a smart contract lose money because a bug in the log means that a token’s contract can not respond to the attempt of a direct transfer, which leads to “Loss” of the token will result in money related to this transfer.

According to CoinDesk, tokens worth around $ 70,000 has already been lost for this reason. Nevertheless, ERC-20 remains a crucial aspect of Ethereum today and is likely to continue to exert massive influence in the future.

10 What are Smart Contracts?

Ethereum smart contracts are based on several computer languages that developers use to program their own functions. Smart Contracts are high-level programming abstractions that are compiled in the EVM bytecode and implemented for execution in the Ethereum Blockchain.

 They can be written in Solidity (a language library with similarities to C and JavaScript), Serpent (similar to Python but outdated), LLL (a language similar to low-level Lisp), Vyper (a strongly-typed Python-derived decidable language), and Mutan (based on Go but outdated).

Smart contracts can be public, which opens the possibility to test the functionality. While a standard contract describes the terms of a relationship (usually one that is legally enforceable), an intelligent contract dictates a relationship to the cryptographic code.

In other words, intelligent contracts are programs that are executed exactly as they were created by their creators.

11 How smart contracts work

It is worth noting that Bitcoin was the first company to admit basic smart contracts in the sense that the network can transfer values from one person to another. The network of nodes validates transactions only if certain conditions are met.

But, bitcoin is constrained to the currency use case.

By antithesis, ethereum replaces bitcoin’s more confining language (a scripting language of about hundred scripts) and changes it with a language that allows developers to write their own programs.

Ethereum grants developers to program their own smart contracts, or ‘autonomous agents’, as the ethereum white paper calls them. The language is ‘Turing-complete’, meaning it supports an extensive set of computational instructions.

Smart contracts can:

  • It works as a “multiple signature” account, so funds are spent only if a required percentage of people agree.
  • Manage agreements between users, for example, if one buys insurance from the other.
  • Use other contracts (much like a software library).
  • Store information about an application, such as For example, domain registration information or membership records.

Stack Reward: By holding a very small number of ethereum in the core wallet we can earn more ethereum.
By holding a very small number of ethereum in the core wallet we can earn more ethereum.

Official ownership: UnLike bitcoin, ethereum is openly known by the people i.e who are creator, founder, co-founder, investors like Microsoft.

12 Applications of Ethereum

Ethereum’s applications are written in one of the seven Turing-complete languages.

Many apps have been suggested for the Ethereum platform, including those that are not possible. The use case proposals included finance, the Internet of Things, farm-to-table products, electricity and pricing, and sports betting. Ethereum is (from 2017) the leading blockchain platform for coin-operated projects with a market share of more than 50%.

As of January 2018, there are more than 300 DApps, hundreds of which are under development.

13 Future of Ethereum?

As we all know that ethereum has better technology and better economic support by Microsoft, so there is no chance for the down in the adoption of this cryptocurrency. Time to time new improvements done by the team (hard fork/soft fork and implementation of POW to POS technology).

New tie-up by the team with different big companies to accept ethereum and that is showing how much ethereum is good at its level. Every Exchange ( where we can buy/sell of cryptocurrency with another cryptocurrency and fiat currency ) has the option of ethereum after the bitcoin as a primary coin market to deal with Crypto trade pair.

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