If you have been reading the news lately or have been online on a few sites then you would be familiar with the term cryptocurrency. It is a hot topic for the new generation and even for seasoned players that know a thing or two about the latest technologies.
Cryptocurrencies are basically decentralized digital cash which has become immensely popular in the past few years. Along with cryptocurrency, there are a few more terms which you would have heard. Blockchain, Bitcoin, and Ethereum would be the ones that would make you turn your heads upon their mention. While many of you would already know Bitcoin to be an ‘online currency’ you might have some questions and doubts regarding other things like Ethereum, blockchain, smart contracts NFT and so on. For now, we’ll focus on Ethereum and try to wrap everything else around it. To understand Ethereum it is important to discuss and understand what a blockchain is and how it is linked to cryptocurrencies like Bitcoin and Ether.
What is a blockchain?
The reason why blockchain is so famous is because of the way it functions. It is a very reliable technology and is also very simple. One main characteristic that one should know is that it is very difficult to hack. The reason is that the blockchain is basically made up of several units, blocks, or ledgers. I suppose we input certain data into a block then the data is verified by all the blocks in the chain and each block is an independent ledger. If you would want to hack or change the data by unverified means then you would have to hack all the blocks in one go which is quite impossible. This is the reason why it is being used for something as important as cryptocurrency.
Now that you understand what a blockchain is, we can now start to answer the question ‘what is ethereum’ and all the other things related to it.
Unlike Bitcoin, which is a cryptocurrency working on a blockchain, Euthereum is not a cryptocurrency. The cryptocurrency or the coin is Ether while the whole blockchain or the decentralized computer network that Ether works on is called Ethereum.
Ether has many characteristics. Apart from being a cash alternative, it has many other benefits which we will discuss ahead.
For those of you who do not know this, Ethereum is also called an EVM or an Ethereum Virtual Machine
One of the many famed functions of Ethereum is to build smart contracts apart from the ethereum game possibilities and crypto. The Ethereum Foundation says that “applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.”
Basically smart contracts are automated services that can be trusted completely and can not be hacked or changed in any way.
A smart contract can be off basically anything. It can be as simple as you and your friend betting on a certain outcome of a soccer match. The conditions and the betting amount can be uploaded on the Ethereum blockchain service. When the result is declared the winner will automatically get the payment. This is obviously a very simple application for the services. There can be more advanced and useful services too like getting a green voucher redeemed every time you shop from a store that supports eco-friendly clothing or an insurance company that can easily dispense money through a smart contract with the client. Of course, the terms, conditions, and other such factors also need to be uploaded. All in all, the application possibilities are endless and the service is trustworthy.
Ether is basically the currency for the Ethereum blockchain. Ether can be mined by becoming a miner or a validator. But what does this mean?
Well, you already know about ethereum and the blockchain. It has thousands of nodes or servers which act as individual ledgers. To approve some change in the ledger all the nodes need to validate the change. For each node to validate a change a certain amount of computing power is required to solve the ‘cryptographic puzzle’. Once a validator validates a change successfully they are paid in return with Ether. This whole process is called mining.
It is a very common debate among people. There are bitcoin and ether supporters all over the globe. While bitcoin is very famous, Ethereum also has its own fan base which is growing rapidly due to its versatility.
Bitcoin is basically a cryptocurrency that is based on blockchain technology. It has a hyper decentralized network that allows for millions of validators to be part of the ledger. On the other hand, Ethereum has only a few thousand nodes or validators. This means that while Bitcoin accomplished a far greater reach, it is very slow due to the vast number of nodes it has to go through. Ethereum on the other hand is super fast and equally reliable. The computing time for a transaction to be validated on bitcoin is 10 minutes while on Ethereum is a quick 12 seconds.
Ethereum is now growing to be one of the most trusted and versatile blockchain services. It has many uses and is being taken up by governments all over the world to help with making their country leap ahead in terms of technology. It is also being used by many organizations to help with their services. The applications are numerous and the more the network grows, the stronger it becomes.