New post Thank you for 2021. Expecting a bigger you in 2022 Read More

RandomTech Recap

What is Ethereum and How it works

2 Mins read

Ethereum explained to a 4-year-old.

Ethereum is a global, decentralized platform for money and new kinds of applications. On Ethereum, you can write code that controls the money, and build applications accessible anywhere in the world.

Ethereum is behind many buzzwords like Defi, NFTs, DAOs, Web 3.0, and much more. Let’s break it down.

What is Ethereum Technology?

The easiest explanation is that:

Ethereum is a decentralized computer spread across the world that lets people build decentralized apps. It was invented by Vitalik Buterin with Smart Contracts at the core, and ether (ETH) is its Currency.

Why do we need Ethereum?

We got Bitcoin emerging as a new form of digital money that would operate outside the control of governments. Years after, people realized that the underlying technology of Bitcoin – the Blockchain – could be used for other purposes asides from transacting.

The birth of Ethereum

Ethereum was conceived in 2013 by programmer Vitalik Buterin. Additional founders of Ethereum included Gavin WoodCharles HoskinsonAnthony Di Iorio, and Joseph Lubin. In 2014, crowdfunded development work began; went live on 30 July 2015.

Ethereum proposed to use blockchain technology not only as a decentralized payment network and store of value but also to store code. This code would be used to tamper-proof decentralized financial contracts and other apps…

Ethereum’s currency (ETH)

You might ask “But isn’t Ethereum a currency too?”

I will say Yes and no.

Ethereum apps and contracts are powered by ether, Ethereum’s digital currency (ETH). Ether was intended to complement rather than compete with bitcoin

More here: ethereum.org

Bitcoin vs. Ethereum

Bitcoin was created as an alternative to national currencies and aspires to be a medium of exchange and a store of value, While Ethereum was created to be the platform powering decentralized apps, and transactions can contain executable code – Smart Contracts.

BTC (Bitcoin) vs. ETH (Ether)

BTC and ETH are both digital currencies.

But: Ether (ETH) doesn’t want to establish itself as an alternative monetary system, Instead: pretends to facilitate and monetize the operation of the Ethereum network, smart contracts, and decentralized apps (DAPPs).

“Ok, so what can I do with Ethereum?” you asked

What you can do with Ethereum?

Imagine I want to borrow $200k to pay for my MBA. I go to my bank and ask for the money they make an analysis of my request and the Bank decides they won’t lend me the money. They say I’m not worth the risk.

“But it’s a Harvard MBA!!”

“Still, sorry Sir.”

“Damn, how can I do it? Something said to my mind,

Why not simply borrow money from friends?”

So, my friends are spread across the world and are willing to loan me the money for a certain interest rate. They believe in me. They are 200 people, and it’s as easy as $1,000 each. “Nice, everything’s set; it’s time to set the contract.

But how?”

Will my friends rely on my reputation? Or will they opt for a more robust solution to set the binding agreement in case I defy the contractual agreement? I think they will go with the later

This is where Ethereum comes in

With Ethereum, they can solve this by setting smart contract agreements eg. The conditions stay written on a Smart Contract, stored in the Blockchain, and every month I’d pay accordingly.

With Ethereum smart contract they can rest assured I will not defy the terms of the agreement. Then I too can pay for my MBA with ease.

Read more about the smart contracts here: Smart Contracts on Blockchain and How it works?

Other Uses of Ethereum

  • Loans
  • Insurance
  • Payments
  • Security infrastructure
  • Healthcare applications And many more

 

Sources and further readings:

 

 

 

84 posts

About author
There's this unexplainable joy I get whenever I write, knowing fully well that my copy will transform people's life and destiny. This rare feeling elates me and encourages me to write more value-packed pieces. I think a divine being has possessed me to write, that is why I write, Therefore, I will advise every of my piece should be regarded as a divine message.
Articles
Related posts
Now you knowRandom

India's Fragrance Company Nirmalaya Raises $800,000 In Seed Funding

2 Mins read
If you have not been to India, movies and documentaries must provide you with some insight into the beauty of India’s culture…
Random

3 social media specific Goals you can set for your Business

4 Mins read
4 benefits you can get from social media You might have and run your own personal social media accounts, however, it’s important…
MobileRandom

Display ads on mobile devices.

3 Mins read
Nowadays, People spend an average of 5hr on their mobiles. Whether you’re focused on driving sales or building a brand, mobile is…
Get powered up with Techpadi Newsletter

Be the first to know what's happening in the African tech space

Leave a Reply

×
Now you knowRandom

Blockchain: Types, Pros, and cons and All you have to know about Blockchain