Ethereum is a decentralized platform that can execute smart contracts. According to the developers, this is how the internet should have worked, namely without the chance of downtime, censorship, fraud, and the intervention of third parties. To explain exactly what Ethereum is, let's first go back to Bitcoin. The virtual currency conceived in 2008 is protected by cryptography and the computing power of a decentralized mining network. Bitcoins are built on a blockchain. This is a kind of large, public ledger in which transactions are recorded. Every computer can see what is credited and debited, making it impossible for the same piece of Bitcoin to be spent twice. A reasonably secure system, and now quite popular as well. Ethereum is also built on a blockchain, but goes much further than Bitcoins.
The advantages of blockchain
To understand Ethereum, you first need to know what blockchain technology is and why you would want to use it at all. One of the major advantages is that no one is watching your transactions anymore. Think about Google and Facebook, for example. Every message you send, every file you save, and every post you make is stored by their servers and then monitored. That is the beauty of blockchain: it is a decentralized, unhackable ledger of transactions. Your transactions are therefore safe, you are no longer dependent on a third party, and those third parties can no longer watch.
Ethereum vs. Bitcoin
You also need 'coins' for Ethereum, just like with Bitcoin. However, they are called 'Ethers' here, although the principle is the same as Bitcoins. The big difference is that Bitcoins are not Turing-complete, which means it is not a full programming language. Ethers are, and thus the number of smart contracts supported is much larger. Ethereum is therefore not intended as a new currency, but as a gigantic virtual machine that runs on a decentralized blockchain. This allows it to provide services and content maintained by the entire network, without needing a company or server for this and having to trust them.
With Ethereum, it becomes easier to create applications based on blockchain, as this technology is very complicated for most people, including IT professionals. But thanks to Ethereum, you don't have to be an expert in this technology to use blockchains. Ethereum has become the common language for developing these applications, which did not exist before. The goal is for Ethereum to become the major app store for blockchain.
And what are we going to do with it?
The possibilities are endless thanks to Ethereum. There are all kinds of potential applications that we can create, without a third party ever needing to look at them. There are already hundreds of hackers and developers creating applications with Ethereum. For example, chat applications, storage services, and social networks are in development. But there could also be new digital ways to close contracts. One example: if a deed of a house is recorded on the blockchain, a notary as an intermediary to verify the transaction is no longer needed. After all, a house cannot have two owners, and the same goes for more transactions. This is already being experimented with by parties like ABN Amro and Goldman Sachs.
The apps are currently not serious competition for the average bank, notary, or a social network like Facebook, as they are still in their infancy. But after a critical look from the masses and further development, they can certainly become that. The launch of Ethereum is therefore an important step for the future. Moreover, major players like Samsung and IBM have invested millions in the development of blockchain technology, making it likely that they will also use Ethereum. This could put the project in a huge acceleration, allowing the applications to quickly gain recognition.
The emergence of Ethereum
Ethereum was developed under the leadership of the Russian-Canadian Vitalik Buterin, a 21-year-old computer programmer. But he received significant help from other techies around the world. For eighteen months, work was done on Ethereum. The funding for this project came in August 2014 through crowdfunding, raising a total of eighteen million dollars for the project. On August 5, 2015, the gradual launch of Ethereum began. And now we are waiting to see what exactly will happen.
What can I already do with Ethereum?
There are already a number of things you can do with Ethereum, even though the project has not been fully launched yet. For example, create a 'greeter', a simple contract that says 'Hello World' when it is called. According to the developers themselves, this is the ideal starting point in Ethereum. But you can also create your own digital currency or build your own application. On the Ethereum website, there is a step-by-step guide to immerse yourself in this way of building applications.