What is Ethereum?

Revolut Contributor

 · August 04, 2020  · 08/04/2020

What is Ethereum? What is Ethereum being used for? Is Ethereum decentralized? Find out the answers to these questions and more in this blog post:

What is Ethereum and how does it work?

Ethereum is both a software platform and a programming language, created for the purpose of building apps that facilitate decentralized digital transactions. Ethereum is:

The benefits of Ethereum are best expressed through what it can prevent. Ethereum blockchain protocol means that it can run WITHOUT:

  • Downtime
  • Control
  • Third-party interference, and thus:
  • Fraud

What is the Ethereum platform?

With its sights set on becoming the “World’s Computer”, the Ethereum Virtual Machine (EVM) uses internationally scattered public “nodes” that distribute the control of data.

To further understand the need for this kind of platform, it’s important to accept a simple fact of contemporary banking and digital transaction – personal data and financial information is being stored on servers and clouds that are controlled by a few key players, such as Amazon, Google and Facebook.

This is currently necessary for modern day business to take place, providing users throughout the world with a host of conveniences that they can probably not remember doing without. The challenge is to ensure that this data is safe and secure, and blockchain proponents want to ensure that control doesn’t exist in the hands of the disproportionately few.

The movement towards decentralization through blockchain technology is one that many of its proponents believe will replace the current client-server model with that of a “World Computer.” The latter would see volunteer-run “nodes” replacing the existing structure.

You can buy Ethereum with Revolut.

What is Ethereum being used for?

To understand Ethereum’s uses, it’s important to understand these two terms:

  1. Smart Contracts: Ethereum blockchain protocol allows for contracts to be fully negotiated, facilitated and actioned digitally. What is significant about them is that they are implemented without the deployment of a third-party, meaning that control is redistributed, and transaction fees are diminished. Smart Contracts can be used in a range of sectors where there is a need for transparent, enforceable contracts between parties.
  2. Distributed Applications (Dapps): Dapps are “decentralized apps” that run on Smart Contracts. These apps are not the property of any individual or company and do not shut down. They run on Ether tokens generated using an algorithm. Because they’re 100% open-source, anyone can contribute to the code at any time.

(If you would like to use an application built on Ethereum, here’s where to start.)

Is Ethereum a currency?

You can think of Ethereum as the planet that supports the life of a currency.

It has its own Ethereum cryptocurrency, known as Ether—the second-largest cryptocurrency by market cap. All applications run on Ethereum make use of Ether, creating a contained network that allows for secure transactions within its bounds.

Ether is the only currency accepted for transaction fees on the Ethereum platform.

What is Driving Ethereum price?

The price of Ethereum has been difficult to predict from the get-go, perhaps because this is uncharted terrain, and as such, its success is not something people could have easily forecast. One thing for certain is that growth has been strong. Perhaps the most central reason is increased application.

Quite simply, the idea is catching on. It has been adopted by some technology giants, including Microsoft and JP Morgan Chase.

How is Ethereum different from Bitcoin?

Ethereum was launched in 2015, taking the knowledge garnered from the invention and implementation of Bitcoin and creating a facilitation network for decentralized virtual exchange. Essentially, some people would describe Ethereum as “Bitcoin + wisdom gained”.

There are some definitive ways in which Ethereum and Bitcoin are similar. They are both distributed public blockchain networks. But there is a marked difference in their fundamental purpose. Whereas Bitcoin is a currency system, Ethereum is the grounds from which decentralized applications can be built and run. Taking the philosophical basis of Bitcoin and its dream of creating a democratized internet, Ethereum facilitates how the infrastructure for this dream can be built and managed.

Interested in journeying further into the frontier of cryptocurrency? Learn more from these articles: