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What is Ethereum?
Ethereum is open source software that leverages blockchain technology to enable developers build and deploy smart decentralized applications.
Ethereum gives developers the ability to make unlimited operations, which means developers can create or build thousands of different decentralized applications, some of which have never been seen before, and the best part of it is there are no middlemen or counterparty risk.
What are smart contracts?
Smart contracts, as the phrase suggests, are blockchain-based applications that run exactly as programmed without any possibility of downtime, fraud, censorship or third-party interference. A smart contract when running on a blockchain network automatically executes when certain conditions are met. It is a program that has the capability to handle enforcement, payments along with facilitating the exchange of money, securities, data, and commodities.
How is Ethereum different from Bitcoin?
Ethereum differs from Bitcoin in terms of purpose and capability. Bitcoin uses a peer to peer electronic cash system to allow online Bitcoin payments or track ownership of Bitcoin digital currency. Ethereum, meanwhile, focuses on running or processing the computer code of any decentralized application built on the network.
Another difference between Ethereum and Bitcoin is that in Ethereum blockchain network, miners work to earn Ether instead of Bitcoin. However, both Ethereum and Bitcoin are applications of a blockchain. They are public distributed networks that rely on blockchain technology in order to work.
What is Ether?
Ether is a type of crypto that fuel Ethereum network. It is a form of digital payment system that developers make to the platform in exchange for required services in Ethereum network, such as execution of requested operations, contributed resources and transaction fees.
Who needs ether?
There are two types of blockchain participants who need ether; all developers who want to use Ethereum blockchain to build apps; and all users who want to access or interact with smart contracts in Ethereum blockchain.
Is ether similar to Bitcoin?
Well, sort of. Like Bitcoin, ether is a cryptocurrency that is built on blockchain technology. However, Ether is treated like a crypto-fuel, which means it is a token whose purpose is to pay for services on the Ethereum network. While Bitcoin is considered a currency or an asset whose value can be traded in, Ether is not.
Can Bitcoin be used in Ethereum blockchain?
Yes. You can use Bitcoin within the Ethereum network in three ways: trade BTC for ETH; use a pegged derivative (ethereum based currency whose value is pegged to the market value of Bitcoin), or use BTC Relay to sidechain bitcoin into Ethereum.
What is Ethereum Virtual Machine?
Ethereum Virtual Machine (EVM) is software that runs in Ethereum blockchain, purposefully designed to enable developers to build and run programs, regardless of the programming language used.
With Ethereum Virtual Machine, developers do not have to build a completely original blockchain for each new application. The process of creating blockchain applications is simplified and made more efficient.
What are the benefits of Ethereum blockchain?
Ethereum blockchain is a decentralized system which means applications that run on Ethereum network get to enjoy the unique benefits of blockchain tech. These include:
Zero downtime, meaning that apps can never go down or be switched off from the network.
Incorruptible tamper-proof, meaning that apps on the network are built around the principle of consensus, thus there's no censorship.
Secure, meaning that apps are securely locked using cryptography, making hacking or fraud impossible.
Immutability, meaning that once deployed, apps are immutable and no third party can erase or make changes to the data.
Do Ethereum based applications have downsides?
Decentralized applications like the ones built on the Ethereum platform aren't faultless. Smart contracts are written by humans, which means they are prone to human error. Because blockchain is meant to be immutable, problems may arise when code bugs lead to attack or exploitation and a consensus cannot be obtained to stop the attack.
What are the uses of Ethereum?
Ethereum is used by developers to build and deploy decentralized applications. These apps are built using programming code that runs on Ethereum blockchain hence cannot be controlled by any individual or central entity. An example of a decentralized application is Bitcoin.
Any services that are currently centralized like auditing, bank payment system, supply chain management, compliance or government registry can be decentralized using Ethereum.
You can also use Ethereum to build Decentralized Autonomous Organizations (DAO). This is a virtual organization that is owned by like-minded people who purchase tokens in Ethereum blockchain, and these token can be translated to equity, shares or ownership. Tokens act as contributions that give people voting rights.
How to access Ethereum?
If you are ready to start developing apps on Ethereum blockchain, use Mist browser to plug into Ethereum network. Another platform that allows users to run and develop decentralized applications on their browsers is MetaMask, a browser that turns Google Chrome into an Ethereum browser.