Ethereum

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Following the explosion in popularity of Bitcoin in previous years,  numerous companies have latched on to the blockchain bandwagon.  Providing a variety of new services and applications for the anonymous  software, new organizations are poised to revolutionize the way people  view blockchain and currency alike.

Despite the wide variety of programs and applications available in  the ever-growing industry of cryptocurrency, Bitcoin continues to steal  away the spotlight.

Many consumers may not even be aware of the multitude of options  available when it comes to the applications of blockchain technology, as  well as the expanding list of ways that this technology can be used to  create entirely new monetary and economic concepts in the inclusive  online community.

One newer blockchain network, Ethereum, is making waves within the  cryptocurrency community. Its systems allow independent programmers to  create their own applications, using them on an entirely decentralized  and public blockchain network.

Like all blockchain applications, its main benefits include the  increased privacy and individual power which can only really be achieved  in a decentralized system of currency.

More importantly, however, this unique system allows the creation of a  variety of sophisticated systems using blockchain technology capable of  handling complex transactions and contracts while maintaining  decentralized anonymity and freedom.

Additionally, Ethereum comes equipped with its own currency available for sale and trade.

Ethereum currently trades lower, making it a good  bet for investors looking for the possibility of long-term gains with an  explosion of the cryptocurrency. 

Because of its place as a newer form of cryptocurrency, the tradable  version of Ethereum has attracted a pretty significant amount of  attention within the crypto-community.

Professionals and casual traders alike have flocked to Ether as a  possible alternative to the normalized Bitcoin, viewing the unique  prospect as a new form of decentralized currency to pour money into in  the hopes of profit in a short time.

However, most experts agree that the main reason to be excited about  Ethereum doesn’t even have anything to do with its currency and the  stable price it provides. Instead, it appears as though the potential  Ethereum’s platform—rather than its physical currency—prevails as the  ultimate cause of the increased public interest in Ethereum.

In any case, the increased interest in Ethereum has caused quite a  bit of change within the world of cryptocurrency. As this platform grows  older, it continues to encounter some of the same ideological and  practical problems faced by platforms using the irreversible and  decentralized blockchain technology.

The growing pains of Ethereum don’t necessarily correlate to an  entirely positive evolution. Misinformation, misunderstanding, and  misapplication continue to present legitimate problems for the world of  Ether.

As a result, there is a direct need that consumers become more  informed on the unadulterated realities behind an increasingly popular  option for those looking to make their fortune in cryptocurrency.

This guide has been created to address a variety of important  considerations regarding Ethereum. Including information surrounding the  currency, the platform, the pros, as well as the cons, this guide  should be regarded as an introduction to the realities behind Ethereum.

Naturally, consumers who are interested in using Ethereum for all it  has to offer probably have some questions about the main feature of the  rising currency. Simply put, the blockchain is a decentralized system  where information can be stored.

In its earlier applications, Bitcoin was one of the only currencies in the world to use blockchain technology.  Bitcoin changed the way people viewed cryptocurrency when they, for the  first time, were able to use blockchain to keep information  decentralized and anonymous.

In order to understand how Ethereum uses blockchain technology, it is  important to first understand how blockchain works. This section will  give readers a basic introduction into what makes blockchain so unique  as a system and as a monetary arbitrator.

Most simply stated, the blockchain is a public arbitrator of  transactions which cannot be altered and does not fall under the control  of any one entity. The technology in its conception is somewhat  complicated, but the features of the blockchain are generally easy for  new users to understand.

Think of the blockchain as a long, long sequence of code and  computers used to relay a transaction from point A to point B. Along the  way, information is often available in parts of the transaction. When  it comes to Bitcoin, for example, transaction logs are available to tell  users what transactions are occurring all over the world in real-time.

While this information is usually very limited and provides for  substantial anonymity, some users still crave an additional layer of  identity protection and decentralization.

The blockchain stores “blocks” of identical information across  several points all over its network. As a result, the information stored  in the blockchain is generally considered unalterable.

There is one exception to the unaltered blockchain, and we’ll discuss  that later. But for now, readers need to understand that the blockchain  exists first and foremost to protect the anonymity of users and the  decentralized, unalterable nature of an online currency.

The decentralized network provides several unique benefits to users.  First, it protects against corruption and tampering. Because the  information is incorruptible and stored across multiple networks, it is  generally considered free from the possibility of tampering from an  outside source.

While some argue that currencies in the real world like the United  States currency can be tampered with, subject to changes of an  underhanded nature, a cryptocurrency’s price, worth, and location is  determined entirely by the market, by the users who create the system.  The blockchain makes this possible.

Were it not for the incorruptible nature of the blockchain, the  currency would be susceptible to the very same problems which plague  modern currencies, online and in the real world. Tampering, editing, and  theft can be avoided with a sophisticated blockchain system.

Additionally, the decentralized networks provided by the blockchain  gives users a more secure network than the internet can typically  provide.

One of the main reasons behind this major benefit is that, because  the blockchain stores the information in several incorruptible ‘blocks’  of code and data, the information which holds currency information is  largely out of the hands of would-be hackers.

When even the owner of a currency cannot reverse the transaction once  it has taken place, it becomes very difficult for those without access  to the original transaction to intercept the transport of a virtual  currency.

Another major benefit of the blockchain is that applications  experience zero downtime. Bitcoin, or other decentralized currencies,  can never be switched off. No matter what the situation, consumers can  never expect blockchain applications to go down. This means that their  worth and value is not dependent on the reliability of their network.

Subsequently, consumers can rest assured that there is no opportunity  for clandestine manipulation of the currency based off of hacking  attacks which cause it to “go down.”

In summation, consumers need to understand that the blockchain is a  very versatile network which provides for the decentralization essential  to the backbone of several key cryptocurrencies. Understanding the  blockchain and how it works is essential to understand how  cryptocurrencies operate in the scope of the online market.

One of the main reasons so many programmers and developers continue  to flock towards Ethereum is that the currency represents a revolution  in the way that people view the blockchain.

As the above section accounts for, block technology is an easy way to  achieve a variety of consumer goals. Particularly when it comes to the  prospect of anonymity in transactions, the use of blockchain technology  is an essential component to many of the major cryptocurrencies we enjoy  today.

Ethereum allows programmers to run their own programs and software on  the Ethereum network. More importantly, it allows programmers to  convert other programs in separate programming languages into usable,  blockchain-enabled programs.

As a result, the entire process of creating a blockchain program has  been overhauled, made ten times easier by Ethereum. This innovation  lends several real-world industries a potentially revolutionary  opportunity.

In the following section, this guide will detail how exactly Ethereum  has worked to innovate the process of blockchain-program creation, and  how this new opportunity could be applied in a variety of real-world  businesses and industries.

The Ethereum Virtual Machine has been called the greatest innovation  of Ethereum. This program is the one that makes it all happen. This  Turing-complete software operates entirely on the Ethereum network. It  allows any programmer to run any program, regardless of the language it  was written in, on the Ethereum network.

This means that virtually any program, if given enough time and  memory, can be changed into a decentralized program with all the  security benefits of a program with blockchain technology.

This isn’t to say that, before Ethereum, the creation of  blockchain-enabled programs was entirely impossible. Before the days of  Ether and the Ethereum network, programmers had to go through the  painstaking process of creating their own, entirely original blockchain  before they could run a program on it.

This means that the creation of a currency would be an extensive  project, taking months to years to even make substantive progress.

With Ethereum, this process is streamlined. Instead of creating a new  blockchain, those looking to run their new program can simply plug it  into the Ethereum Virtual Machine and convert their work into a usable  entity on the Ethereum network.

First, Ethereum’s primary purpose and application has always been the  creation of decentralized applications. Because programs can easily be  created which use the blockchain technologies, Ethereum’s Virtual  Machine allows programmers to create a variety of programs that have no  leader.

Because the information in these programs will be stored in several  different, decentralized places, the security of the blockchain becomes  even more pronounced, even on programs and organizations with a low  budget seeking anonymity.

One of the intuitive applications of Ethereum is the creation of  Decentralized Autonomous Organizations. DAOs are coalitions of  like-minded individuals which operate outside of the desires or actions  of any one leader. These organizations are particularly important in  industries that demand privacy and equality in structure.

Unlike the traditional model of an organization with monetary  backing, a DAO has no leader; all of the members who own ‘tokens’ in the  organization are entitled to voting rights in the happenings of the  organization of which they are a part.

Current apps being developed on Ethereum give consumers and  researchers a good way to predict the kinds of applications that the  Ethereum network provides for.

For example, Weifund is an open crowdfunding platform which converts  campaign contributions from users into contractually-backed assets that  can be traded within the Ethereum network.

Additionally, programs like Uport are made to store personal information outside of the control of a centralized government.

Using blockchain technology, the creators of this program allow  citizens to privately store their information on an entirely  decentralized network which cannot fall into the hands of a government  or agency which they may not trust.

As mentioned in the introductory section, Ethereum has experienced a  problem that many other contemporary cryptocurrencies have also had to  face. After a fierce argument online, members of the Ethereum community  executed what the industry calls a “hard fork.”

A hard fork changes the core code in Ethereum, usually to return funds to someone after something bad has happened.

In this particular case, an unknown hacker took advantage of an  exploit to hack into, and steal from, a popular Decentralized Autonomous  Organization on the Ethereum network. In the end, the equivalent of $50  million USD was taken, lost to an anonymous thief.

The community debated for quite some time, but they eventually  decided that the best course of action was to execute a hard fork and  edit the code of Ethereum to return the money to the organization.

This was, and still is, a very controversial choice. The precedent of  irreversibility is more important to some users than the money that was  stolen—and for good reason! Many users feel that a decentralized  currency should be truly unchanging.

These users feel that the precedent of never reversing a transaction is what gives a decentralized system its strength.

Because of the major division within the Ethereum community, Ethereum  split into two separate entities. Ethereum Classic is identical to  regular Ethereum up into the block of information where the hard fork  happened. After that, the two blockchains act as separate entities.

For the average user, this split means very little. However, it is  important that consumers understand that the hard fork acts as evidence  that, though the irreversibility and decentralization of a blockchain is  one of its main selling points, it is not infallible—resets do happen.

If you are looking to simply purchase the currency as if it was a  stock then there are many options out there for such an investment.  Ethereum is the system of currency, but the actual product is called  Ether. It is similar to the way we refer to money as the abstract  concept, but a dollar is a quantifiable amount of said money.

Ether is the term for a unit of currency that is involved in the  Ethereum system of transactions. You can purchase this currency and hope  that the price of it goes up so you can make a return on your  investment. This way of acquiring Ether is sort of like investing in a  precious metal such as gold or silver.

You aren’t actively making and working for this Ethereum, but it is  more like an investment. There is a certain exhilarating feeling  associated with purchasing a cryptocurrency such as ethereum. It is  quite entertaining to know that you have a share in this very niche  currency.

Although you are not doing much more than making an investment in  Ethereum when you get it this way, it is nonetheless a very intriguing  and popular use of the currency.

Investing in Ethereum is a legitimate way to try to get in on this  very new and rising cryptocurrency. Everybody has heard of Bitcoin as a  cryptocurrency, and many people have had their interest sparked towards  these exotic forms of money.

People have been drawn into Ethereum because it provides a certain  level of appeal to be on the ground floor or among the first individuals  to interact with something that has the potential to be a huge success.  It also operates on a very secure system.

They have many people all around the world keep a copy of their  Ethereum jobs as well as when one was completed. This process is known  as Mining Ethereum, and it is the next way that one can contribute to  Ethereum as well as make some Ether simply by allowing your computer to  store this ledger of sorts.

Mining is somewhat of an abstract term. What you are actually doing  is allowing your computer to become a link in the large chain of  Ethereum users and you will allow your computer to receive updates  whenever someone near you completes a job and needs to be distributed a  certain amount of Ether. You act as a waypoint for this block chain.

It is similar to a bucket brigade. Information comes from one of the  main Ethereum operating points out to these miners. Ethereum is like a  giant ledger and if you lend your computer to be a miner than you will  be sending messages to this ledger whenever Ether needs to be  distributed.

It is much easier and more efficient to run a cryptocurrency in this  manner instead of having one single computer that could get hacked and  have all the data lost. This way of distributing all of the information  to miners all across the world has many benefits, and it also has  benefits for those who allow their computer to mine for ethereum.

Roughly every 12 seconds one block is added to the blockchain. This  means that every 12 seconds somebody is signing their computer to mine  ethereum. When a computer does this they sign themselves up to keep and  maintain that ledger of Ether distribution.

If one of the main computers were to be hacked or were to fail then  the miners would all keep the leger so there would never be much danger  to the information. You will be awarded 5 Ether for allowing your  computer to do this, but you will also be distributed Ether periodically  while your computer is mining.

The amount of Ether varies based on your computer’s processing power.  A much better and faster computer will be given Ether far faster than a  slow computer, but you will be given Ether nonetheless.

The reason Ethereum was created was so it could be a currency to  facilitate the exchange of goods and services. People who need a job  done can put out contracts for people to perform as well as set a level  that the worker needs to be paid for doing a task.

It is very much like working at a traditional facility, except online and using a cutting edge form of currency.

For example, say that you own a small company and need a bit of  coding done for your software. You put out 5 contracts that have a  timeframe as well as a payment of 5 Ether upon completion. This info  goes out to all of the blocks around the world, and whoever completes  one of the contracts will send it off to one of their local blocks.

Let’s say that one of these coders lives in Brazil. He does the  coding and alerts his local block. The Ether is then transferred to his  account. This same process occurs for coders in Russia, Australia,  France, Mexico, and anywhere else you could possibly imagine.

Once a contract is fulfilled, a message is sent to blocks all around  the world and they will know that there are only 4 contracts left to  fill. Then 3, then 2, then 1, and then all of the contracts have been  completed for that particular job. All of the workers will be paid, and  the small business owner is happy that his coding was completed.

This method of distributing work that you need done all around the  world has many advantages. You are not limited by geographical factors.  Someone could live on the other side of the world and still be able to  get this coding job done.

There are many other jobs that exist. A podcast may need an audio  engineer to make his podcast sound the best that it possibly can.