Ethereum. Vitalik Buterin. Smart Contracts. Lambos. Ethereum has brought the second wave of users into the crypto world. After shooting up almost 4000% in June of 2017, cryptocurrencies were being mentioned in Vice articles, everybody was trying to figure out how to set up a Coinbase account, and the term “hodl” had an increased search percentage of about 50%. Ethereum, along with reeling in thousands of new investors, brought a lot of confusion to the table. Ethereum is a smart contract system and introduced a new kind of transaction. While most bought Ethereum thinking it was just a currency like Bitcoin, what they didn’t realize is that they were buying into a whole new concept, that will revolutionize the blockchain world as we know it.
1. Smart Contracts
This is where most of the confusion about Ethereum comes from. Ethereum is a currency, yes, but it is not just a currency: it is a smart contract. These smart contracts have the power to enforce and execute the terms of the contract, with the immutability of the blockchain to keep it true. These “contracts” are normally used in Ethereum to write applications for programs that can run on the Ethereum blockchain. Smart Contracts have so far opened up possibilities with DApp building, and hundreds of new ICOs (we’ll get into these two later). Smart contracts are redefining what we see as “currency” and “transaction.” Being able to attach metadata to a transaction, for example, can give us the ability to transfer ownership of digital assets, art, and many real world properties.
Ethereum is currently (by a long slide) the 2nd largest market cap of any cryptocurrency on the market. This is due largely to the giant increase in value of the coin that happened between April and June of this year. Its high value is largely due to offering something very different from Bitcoin. Although Bitcoin has a blockchain that can be written on, Ethereum’s blockchain and smart contract protocols are far superior for writing programs on. Bitcoin, in the broad sense, is seen as a currency; Ethereum is seen as a smart contract that can write applications. These differences make for large markets in both tokens.
3. Ethereum Virtual Machine
The Ethereum Virtual Machine (EVM) is a software running the Ethereum network. In each virtual machine, the developer can create any kind of blockchain application, with its own currency. This has opened a lot of possibilities for developers to create applications with the safety and security of the blockchain.
4. Ethereum is a fork from the original Ethereum (Ethereum Classic)
There was a moment in Ethereum’s history when it was one. But, because of a hack the siphoned money ($50 million) out of a community pool, the founders (Gavin Wood and Vitalik Buterin) decided to fork from the original blockchain, and create something new that would be impervious to the loophole that stole $50 million from them. This hard fork became the new Ethereum. There were others from the community that didn’t want to fork, and because nothing is centralized in cryptocurrencies, they held onto the original blockchain and named it Ethereum Classic.
5. The DAO
The DAO is a Decentralized Autonomous Organization. Anybody can create a DAO within the Ethereum blockchain. This is basically an organization that uses Ethereum’s smart contracts to keep the organization decentralized. Users will be able to vote transparently on different topics for their company, and the voting process will be done transparently through the blockchain. Having your organization run by a robot allows there to be zero influencing or bargaining to affect the voting process.
DApps are decentralized applications that can be built upon smart contracts using the Ethereum blockchain. Using the Ethereum Virtual Machine, you will be able to create a program that uses Ethereum’s immutable blockchain. Like the DAO, all transactions made within the DApp will become transparent, and virtually impossible for fraud. Fraud is a major human problem and happens on many levels, from big to small. Transparency and decentralization make it almost impossible to hide anything on your program, or to create under the table deals.
7. Vitalik Buterin
Something everyone loves about the Ethereum community is Vitalik. He is the co-founder and arguably the face of Ethereum. Always a Bitcoin enthusiast since its inception, he was able to receive the Theil Fellowship of $100,000, which got him to start Ethereum full time. His name is so tied to Ethereum, that there was a death hoax about him on June 25, 2017 that caused a flash crash in the price over Ethereum.
Ethereum even has its own language, written specifically for the Ethereum Virtual Machine. It is a loosely typed language that has been slimmed down to generate machine level code. It’s been known as a very easy language to learn and will make for long term developers to become involved in the project. To learn the language will make each developer more invested, and will push the technology to be used in incoming projects.
9. Trustless Crowdfunding
This is another great example of how a smart contract can be put to good use. A smart contract can be written to be a holder of money for crowd funding. If you want to start up a project, and investors want to trust who they are funding to, this smart contract can hold the money until all funds are received.
And if you want to bring it further, if you crowdfund with Ethereum as the currency you are raising the funds with, you can use metadata to tag each Ethereum you spend and show the investors what exactly you are spending their money on. This is a great tool that most cryptocurrencies will be capable of when more shops and stores accept crypto as a form of payment. The transparent ledger will be available for the investor, and everyone for that matter, to see.
10. Anyone can start building on Ethereum
Just check out Ethereum.org and see for yourself! Ethereum makes it very easy for anyone to kickstart a project, learn Solidity, or build a DApp. Because it is already so popular, on top of the organization creating tutorials, the giant community that surrounds Ethereum is also creating tutorials on how to start all these projects. Ethereum is a leader in bridging the gap between the blockchain world and the fiat-world.