🤩All About Ethereum

A complete beginner's guide to how Ethereum works, the benefits it brings and how it's being used by millions of people around the world.

Ethereum is a technology for building apps and organizations, holding assets, transacting and communicating without being controlled by a central authority. There is no need to hand over all your personal details to use Ethereum - you keep control of your own data and what is being shared. Ethereum has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network.

Still confused? 😕 Let's explain everything step-by-step.

📔 What is Blockchain?

A blockchain is a database of transactions that is updated and shared across many computers in a network. Every time a new set of transactions is added, its called a “block” - hence the name blockchain. Most blockchains are public, and you can only add data, not remove. If someone wanted to alter any of the information or cheat the system, they’d need to do so on the majority of computers on the network. That is a lot! This makes established blockchains like Ethereum highly secure.

What is the difference between Ethereum and Bitcoin?

Launched in 2015, Ethereum builds on Bitcoin's innovation, with some big differences.

Both let you use digital money without payment providers or banks. But Ethereum is programmable, so you can also build and deploy decentralized applications on its network.

Ethereum being programmable means that you can build apps that use the blockchain to store data or control what your app can do. This results in a general purpose blockchain that can be programmed to do anything. As there is no limit to what Ethereum can do, it allows for great innovation to happen on the Ethereum network.

While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you.

What can Ethereum do?

Banking for everyone

Not everyone has access to financial services. But all you need to access Ethereum and its lending, borrowing and savings products is an internet connection.

A more private internet

You don't need to provide all your personal details to use an Ethereum app. Ethereum is building an economy based on value, not surveillance.

A peer-to-peer network

Ethereum allows you to move money, or make agreements, directly with someone else. You don't need to go through intermediary companies.

Censorship-resistant

No government or company has control over Ethereum. This decentralization makes it nearly impossible for anyone to stop you from receiving payments or using services on Ethereum.

Commerce guarantees

Customers have a secure, built-in guarantee that funds will only change hands if you provide what was agreed. Likewise, developers can have certainty that the rules won't change on them.

All products are composable

Since all apps are built on the same blockchain with a shared global state, they can build off each other (like legos). This allows for better products and experiences being built all the time.

Meet ether, Ethereum's cryptocurrency

Ethereum has a native cryptocurrency called ether (ETH). It is purely digital, and you can send it to anyone anywhere in the world instantly. The supply of ETH isn’t controlled by any government or company - it is decentralized and completely transparent. New coins (also commonly called tokens) are issued only to stakers who secure the network.

Every action on the Ethereum network requires a certain amount of computational power. This fee is paid in the form of ether. This means you need at least a small amount of ETH to use the network.

What are smart contracts?

Smart contracts are simply computer programs living on the Ethereum blockchain. They only execute when triggered by a transaction from a user (or another contract). They make Ethereum very flexible in what it can do and distinguish it from other cryptocurrencies. These programs are what we now call decentralized apps or dapps.

Have you ever used a product that changed its terms of service? Or remove a feature you found useful? Once a smart contract is published to Ethereum, it will be online and operational for as long as Ethereum exists. Not even the author can take it down. Since smart contracts are automated, they do not discriminate against any user and are always ready to use.

Popular examples of smart contracts are lending apps, decentralized trading exchanges, insurance, crowdfunding apps - basically anything you can think of.

Lots of theory! Let's move on to Hands-on!