If you have recently become acquainted with the high-traffic world of digital currencies, you will often hear the name “Ethereum”. After understanding the general concept of the Chinese blockchain and how it works, and starting a professional career in digital currencies, getting acquainted with the Ethereum concept and its blockchain can be your starting point for entering the professional world of these cryptocurrencies.
What is Ethereum?
Answering to the question of what is Ethereum is the main purpose of this article. Ethereum is an open source public platform based on blockchain technology that, in addition to providing digital currency, has other features such as smart contracts and decentralized and automated applications. The platform was officially announced on July 30, 2015, under the direction of a 23-year-old Russian man named Vitalik Butrin. Ethereum, like Bitcoin, is a subset of digital currencies. Blockchain technology used in the two has several technical differences, but the most important is their differences in their goals, activities and capabilities.
To learn more about bitcoin and how it works, you can read here.
The Bitcoin’s blockchain was designed to track the ownership of its own digital currency, while the Ethereum Blockchain is designed to run decentralized programming codes. Ethereum’s digital currency, which is based on the Ethereum’s blockchain, is called Ether, which is denoted by the unique ETH symbol. The differences between Bitcoin and Ethereum’s blockchain can be described as follows:
Bitcoin is like an operating system that only has the ability to run a specific program (Bitcoin digital currency), but Ethereum is like an operating system that runs thousands of different software and services. Now, with the above example, the concept of token can be well understood. Tokens are, in fact, digital currencies of decentralized programs that do not have a private blockchain and use the Ethereum’s blockchain for supply. The three most popular Ethereum-based digital tokens or currencies in the world are Binance, Maker, and OmiseGo.
On this blockchain, instead of mining bitcoins, miners work to extract a cryptocurrency called ether. Ether can also be used by developers to pay for software transactions.
In order for you to fully understand the concept of mining, please read the article on “What is mining?”
Dr. Gavin Wood, co-founder of Ethereum, says:
Bitcoin is a pioneer in digital currencies; This network is a kind of software on a blockchain. However, Bitcoin is just a software. For example, email is one of the uses of the Internet, but it is only one of thousands of applications of this technology.
Unlike the bitcoin that was extracted, the initial supply of ether currency was done through pre-sale, and of course, the supply of ether, despite the 21 million bitcoin limit, is unlimited.
Let’s talk a little bit about smart contracts.
What is smart contract?
The protocol used to set up contracts is called smart contract. This protocol is activated for the transaction, participation, approval or execution of the provisions of a specific contract. These contracts operate without the intervention of a third party. All items recorded in the contract can be tracked and are non-refundable. Smart contracts, in addition to containing all the information and conditions related to the contract, perform all the targeted actions automatically.
How do smart contracts work?
Consider a subway ticket vending machine. When you want to buy a single ticket from this device, you enter the money into the device and the device automatically processes your money and delivers the ticket you want. Apart from technical issues, smart contracts work just like the above mentioned machines. Without the need for a third party or organization, they automatically process the payment or execution of a contract and, if no error occurs in the contract, begin the activity. The assets and terms of the contract are first coded and placed in blockchain blocks. It is then distributed between the nodes of the platform and several copies are made, and finally the contract is executed in accordance with the pre-determined conditions. The smart contract system is completely decentralized, meaning there is s no person, organization or centralized management system to control them and There are no provisions for a contract. So when the terms of a contract are correct, the activity of this system starts automatically. Most blockchains are limited. But instead of running a limited number of operations, the Ethereum Blockchain allows developers to run automated software on their blockchain. Anyone who is able to provide a decentralized program can use the blockchain of these cryptocurrencies.
Ethereum Virtual Machine
The Ethereum Virtual Machine (EVM) is a software application that runs on the Ethereum network. This system provides the user with the amount of time and memory they need. Virtual Machine makes the process of blockchain applications very efficient and easy. The Ethereum platform enables developers to run decentralized applications. A decentralized program can perform a specific operation without the need for an intermediary and using a mass distribution system.
Advantages of using Ethereum Decentralized Platform:
Just as decentralized applications run on this blockchain, all the benefits of blockchain apply to them:
Unchanging, so that no one can manipulate information.
Impenetrable, it is not possible to penetrate the network and delete or manipulate data.
Secure, without central management interference and security guaranteed with encryption.
Permanent activity, that is, programs are constantly active, and it is not possible for anyone to stop them.
Weakness of decentralized programs:
Since program coding is done by the human factors and after launching, it is no longer possible to change the programs. The DAO project is an example in which programming errors caused hackers to steal $ 60 million.
The next issue is the law debate. Smart contracts have not yet been accepted by many governments. So in the future, with the creation of a legal framework for smart contracts, new issues may be added.
The next weakness of these programs is the cost of implementing them. You need one or more skilled programmers to create a smart contract, which, of course, costs money. But a trial version has also been created that allows users to build some contracts without the need for programming.
There are many digital wallets and each has its own uses and benefits. The types of digital wallets are: hardware wallet, multifunction wallets, paper wallets, software wallets…
Each of the above types includes different brands and companies, each of which has certain features in terms of security, user-friendliness, and support of different currencies. Using the Mist Quality Monitor, you can connect to the powerful Ethereum blockchain network, which also supports smart contracts.
Ethereum price and the factors affecting it
The total value of Ethereum’s market is more than $ 70 billion, and Ethereum’s price at the time of writing is more than $ 230. On December 28, 2016, the price of each Ethereum unit was only $ 8, and the figures show that the currency has grown by more than 9,000 percent in the past years. This unparalleled figure shows the rapid popularity of this cryptocurrency. Since this digital currency is a practical currency, the higher the usage, the higher the price of Ethereum will be.
This huge blockchain is very useful in intelligent processes and smart contracts. As smart contracts are accepted by more organizations, the use of Ethereum is increasing and the price of Ethereum is also increasing. This digital currency is currently well established in major global markets and is one of the reference currencies in digital currency trading. Using the pricing of this currency and the short-term forecasts of the Ethereum price, the traders receive a good deal of profit.