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What is Ethereum? Open Source encryption platform explained

What is Ethereum?  Open Source encryption platform explained

Update: yes While Bitcoin limits the number of «coins» in circulation to 21 million, in an attempt to manage supply and demand and regulate their price, Ethereum does not apply this limit to its own offering, Ether. As a result, the cryptocurrency has grown in number of months, finally reaching the 100 million mark earlier this week.

This is a major milestone, even the co-founder of Ethereum, Vitalik Buterin did not think he would be touched in this century. It is indicative of rising cryptocurrencies and hype in recent months and is of concern to investors. The more Ethereum there is in circulation, the less rarely it means that it loses its value. This increase occurs as the price of Bitcoin continues to fall 10% in early June, at the lowest price in two months, after a small crypto exchange in South Korea said it had been hacked. The collapse brings the total amount wiped out of Bitcoin’s market value to a staggering $ 120 billion.

Read on to learn more about Ethereum, blockchain and Bitcoin

Most of us understand the principle of cryptocurrencies, but even the most skilled in technology can struggle with details. One name that is often used when talking about this increasingly popular trend is Ethereum.

Ethereum is an open source platform that allows you to create your own decentralized applications and earn a marketable cryptocurrency called Ether. All of these applications are built on blockchain technology, and Ether can be used to pay for network services.

If that summary doesn’t make sense to you, don’t be afraid. Keep reading.

To understand Ethereum, it is best to start with a basic understanding of the blockchain.

Blockchain

I probably know blockchain , because Bitcoin cryptocurrency has existed for years. Bitcoin is stored and balanced by an encrypted peer-to-peer network, the blockchain.

In basic terms, a blockchain is a way to record data. It is essentially a digital register of transactions, agreements or contracts – anything you would like to check has happened. The technology works by distributing the registry to thousands of computers around the world over the network.

READ MORE: How blockchain works

The advantage of the blockchain is that it can eliminate the middle person, such as banks or financial institutions, in a transaction, while allowing the transaction, contract or agreement to be secure and reliable. Let’s take the example of Bitcoin.

When a user wants to send bitcoins to another person, he transmits the details of the transaction (their public key, the recipient’s public key and the amount of bitcoin transferred) to the network of interconnected nodes.

What is a blockchain?

Other computers on the network, similar to witnesses when someone signs a contract, independently verify this transfer information.

These other nodes use a «digital signature» to authenticate a transaction, which they obtain after going through the encryption process. Once the transaction message has been confirmed as authentic, the transaction data must be added to the blockchain to be considered «confirmed». Because it is distributed, it is even more difficult to hack.

But it’s not just about Bitcoin. Bitcoin has laid the groundwork for more complicated technologies, such as Ethereum, which also use blockchains .

“Bitcoin is primarily a currency; this is a special application of a blockchain «, he said Dr. Gavin Wood, co-founder of Ethereum . «However, it is far from the only application. To take an example from a similar situation above, email is a special use of the internet and has certainly helped to popularize it, but there are many more. «

Ethereum

Ethereum takes the idea of ​​the blockchain one step further. Is a open source platform which allows users to create their own «decentralized» or Dapps applications. Dapps are transparent, distributed applications that do not run entirely on a single computer, but are distributed and controlled by everyone on the network.

Before Ethereum was invented in July 2015, blockchain-based technologies were forced to perform only a few limited operations depending on the type of application they were in. For example, Bitcoin and others cryptocurrency were developed to function exclusively as peer-to-peer digital currencies.

«I thought [aquellos en la comunidad de Bitcoin] they did not approach the problem correctly, «said Vitalik Buterin, the inventor of Ethereum. “I thought they would look for individual applications; they were trying to explicitly support each [caso de uso] in a kind of Swiss Army Knife Protocol «.

Now, with Ethereum, someone who wants to develop a blockchain-based application doesn’t have to start from scratch. I can use Ethereum software, which provides the code for decentralization. They just need to write their own «smart contract code» to describe what their application does.

EVM and Ether

The biggest breakthrough that allowed Buterin to create Ethereum was development Ethereum virtual machine (EVM). This is a virtual machine on the Ethereum blockchain that can run any script using an international computer network.

Applications created with Ethereum are based on the blockchain consensus method, which means that a third party or just a member of the network cannot modify them. They cannot «go down» or disconnect and are safe because they are distributed.

One of the easiest ways to create your own Ethereum application is to use the Mist browser. Users have a digital wallet, where they can trade and store «Ether» and write smart contracts.

weifund_ethereum

Ether is almost the equivalent of Bitcoin’s Ethereum, because it is a cryptocurrency. Ethereum blockchain workers have been working for me for Ether since in the same way you can extract Bitcoin . Ether is also negotiable, just like Bitcoin, but can also be used to pay transaction fees and network services.

Some Ethereum success stories include UPort ™ , which is a secure way for people to maintain control over their personal information and identity, rather than relying on government institutions. Another is Weifund , a platform of crowdfunding through smart contracts.

In the future, many other decentralized applications will follow. «If you think the Internet has affected your life, Ethereum will have the same ubiquitous influence on our communications, on our entire information infrastructure,» said Joseph Lubin, CEO of Consensys. «It will affect all aspects of our existence.»