Updated: Dec 21, 2019
Ethereum can be best described as an open, decentralized platform which enables developers to build various applications, such as smart contracts among other complex financial and legal applications. You can think of ETH as a programmable Bitcoin that allows developers to create digital organizations, shared ledgers, and markets by using the underlying blockchain.
This post will explain what Ethereum is all about, its creators, the way it works, uses and applications.
What is Ethereum Designed For?
Blockchain operations could perform a very limited set of functionalities and operations before the creation of Ethereum. For instance, Bitcoin was limited to operate only as a peer-to-peer digital currency. The creators developed a new approach to blockchain technology in the form of the innovative Ethereum Virtual Machine (EVM). This Turing-complete software is at the core of Ethereum and enables developers to run any program on any programming language as long as there is enough time and memory.
The basic reason behind designing ETH was to render the process of creating blockchain applications easy and more efficient than before. Ethereum enables the development of more than a thousand different applications in the same platform instead of having to start from scratch in building a new blockchain for every new application.
Who Is the Team Behind Ethereum?
Ethereum was initially outlined by Vitalik Buterin in a white paper in late 2013 with the goal to build decentralized applications (Dapp). Buterin is known for his contributions to a number of other successful projects, including cryptocurrency marketplace site Egora, Bitcoin Python libraries, and the DarkWallet.
Co-founder Gavin Wood, who is currently the CTO of Ethereum, is also the founder and former Chairman of Parity Technologies of the Parity Bitcoin technology stack fame.
Joseph Lubin, an important member of the team, is known for creating other successful enterprises, like ConsenSys, a Brooklyn-based software-production studio.
The team decided to create Ethereum as a non-profit solution to build decentralized applications that were not under the control of any entity, organization or government. For instance, Eth-Tweet is being developed as a decentralized microblogging service that provides basic Twitter functionality without being under the control of any central entity.
How Does Ethereum Work?
Ethereum, at its simplest, works as an open software platform that is based on blockchain technology designed to enable developers to deploy decentralized applications or Dapps.
It works a lot like Bitcoin, in the sense that it is a distributed public blockchain network.
However, where Bitcoin blockchain is focused on tracking the ownership of bitcoins (digital currency), the Ethereum blockchain is used to run programming code of a Dapp.
Miners in the Ethereum blockchain work to earn a type of crypto called Ether, which fuels the entire network. Ether, besides being a tradable digital currency is also used by developers to pay for services and transactions on the Ethereum network.
There is another type of token used in the network called “gas” which helps entice miners for including transactions in their block.
What are Ethereum’s Current and Future Applications?
Ethereum enables developers to create Dapp across a broad range of industries and services. These Dapps are not controlled by any central entity or individual and are more or less in unchartered territory, which makes it difficult to tell which Dapps will succeed.
These are a few ongoing and future uses of Ethereum:
The Vevue project is based on the Ethereum decentralized system and is a promising first step in “bringing Google Street View to life”. It allows users to make 30-second video clips of places, restaurants, events and hotels to share on the web and earn tokens in return.
Etheria is a virtual world on the lines of Minecraft where players own titles, use or farm them for blocks, and create things. The project is created entirely on the decentralized Ethereum blockchain.
KYC-Chain is working on a project that employs Ethereum to allow an individual to share only necessary personal information and nothing else. It plans to act as a trusted gatekeeper and provide businesses with a simple approach to onboard new customers.
4G Capital has developed a unique concept Dapp using Ethereum and smart contracts. The concept is designed to help small business growth in Africa by providing instant access to credit by using digital currency. Donors would be able to fund small businesses in Kenya through the Dapp. The digital currency lent would be converted using 4G Capital’s transactional system and disbursed to the businesses.
Ethereum is moving towards a bright future by providing individuals and businesses with a user-friendly platform that harnesses the power of blockchain technology. Most significant businesses are expected to use private blockchains to run their business processes in the next two years.