What is Ethereum and is it the right cryptocurrency for you? Let’s begin by helping you understand what Ethereum is.
Ethereum is a native currency that powers the Ethereum platform. Ethereum is a decentralized software platform created by Vitalik Buterin that enables SmartContracts and Distributed Applications (DApps) to be built and run without any downtime, fraud, control or interference from a third party.
Ethereum is not just a platform but also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications.
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Ethereum blockchain (founded in 2013) is believed to be the most significant iteration of BTC structure and a real push to blockchain technology development. Ethereum started a new era of Blockchain 2.0, giving rise to smart contracts and dApps (decentralized blockchain technology applications, programs or tools).
A co-founder of Ethereum Vitalik Buterin in one of his interviews explained smart contracts as “a computer program that directly controls digital assets…being used in a bunch of applications like insurance, any self-executing financial contracts, systems for crowdfunding, DNS (like already existing Ethereum Name System), etc.”
dApps are run on blockchain or peer-to-peer network which does not require any middleman to control or manage any user’s data. They are open-source, decentralized, rely on consensus mechanism and have no single points of failure (SPOF). Among SPOF examples are a data center with failed generator backup, a service provider that can’t handle a power outage, and even people who may fail to meet their obligations, etc.).
By 2019 there were over 2,000 dApps already launched on the basis of Ethereum platform. A good part of them still under development are limited to gaming, gambling or exchanges until the network is enhanced. Another popular dApp development platform is naturally Bitcoin Blockchain. Being the first blockchain generation platform, it also has an active community of developers, tools and frameworks.
However, it is Ethereum that is credited with expanding the vision of blockchain from cryptocurrency to a system which can be applicable to other domains such as identity management systems, supply chain management, energy grid, trade finance, government systems, etc. Ethereum blockchain allows implementing a key purpose of a blockchain – eliminating the need in a third party to regulate any transactions instead verified by achieving a consensus of all the participants in the system.