Following the explosion in popularity of Bitcoin in previous years, numerous companies have latched on to the blockchain bandwagon. Providing a variety of new services and applications for the anonymous software, new organizations are poised to revolutionize the way people view blockchain and currency alike.
Despite the wide variety of programs and applications available in the ever-growing industry of cryptocurrency, Bitcoin continues to steal away the spotlight.
Many consumers may not even be aware of the multitude of options available when it comes to the applications of blockchain technology, as well as the expanding list of ways that this technology can be used to create entirely new monetary and economic concepts in the inclusive online community.
One newer blockchain network, Ethereum, is making waves within the cryptocurrency community. Its systems allow independent programmers to create their own applications, using them on an entirely decentralized and public blockchain network.
Like all blockchain applications, its main benefits include the increased privacy and individual power which can only really be achieved in a decentralized system of currency.
More importantly, however, this unique system allows the creation of a variety of sophisticated systems using blockchain technology capable of handling complex transactions and contracts while maintaining decentralized anonymity and freedom.
Additionally, Ethereum comes equipped with its own currency available for sale and trade.
Though perhaps not much compared to the whopping $1700 in value currently attributable to a single Bitcoin, Ethereum currently trades at a somewhat stable $87, making it a good bet for investors looking for the possibility of long-term gains with an explosion of the cryptocurrency.
Because of its place as a newer form of cryptocurrency, the tradable version of Ethereum has attracted a pretty significant amount of attention within the crypto-community.
Professionals and casual traders alike have flocked to Ether as a possible alternative to the normalized Bitcoin, viewing the unique prospect as a new form of decentralized currency to pour money into in the hopes of profit in a short time.
However, most experts agree that the main reason to be excited about Ethereum doesn’t even have anything to do with its currency and the stable price it provides. Instead, it appears as though the potential Ethereum’s platform—rather than its physical currency—prevails as the ultimate cause of the increased public interest in Ethereum.
In any case, the increased interest in Ethereum has caused quite a bit of change within the world of cryptocurrency. As this platform grows older, it continues to encounter some of the same ideological and practical problems faced by platforms using the irreversible and decentralized blockchain technology.
The growing pains of Ethereum don’t necessarily correlate to an entirely positive evolution. Misinformation, misunderstanding, and misapplication continue to present legitimate problems for the world of Ether.
As a result, there is a direct need that consumers become more informed on the unadulterated realities behind an increasingly popular option for those looking to make their fortune in cryptocurrency.
This guide has been created to address a variety of important considerations regarding Ethereum. Including information surrounding the currency, the platform, the pros, as well as the cons, this guide should be regarded as an introduction to the realities behind Ethereum.
Introduction To Blockchain
Naturally, consumers who are interested in using Ethereum for all it has to offer probably have some questions about the main feature of the rising currency. Simply put, the blockchain is a decentralized system where information can be stored.
In its earlier applications, Bitcoin was one of the only currencies in the world to use blockchain technology. Bitcoin changed the way people viewed cryptocurrency when they, for the first time, were able to use blockchain to keep information decentralized and anonymous.
In order to understand how Ethereum uses blockchain technology, it is important to first understand how blockchain works. This section will give readers a basic introduction into what makes blockchain so unique as a system and as a monetary arbitrator.
Most simply stated, the blockchain is a public arbitrator of transactions which cannot be altered and does not fall under the control of any one entity. The technology in its conception is somewhat complicated, but the features of the blockchain are generally easy for new users to understand.
Think of the blockchain as a long, long sequence of code and computers used to relay a transaction from point A to point B. Along the way, information is often available in parts of the transaction. When it comes to Bitcoin, for example, transaction logs are available to tell users what transactions are occurring all over the world in real-time.
While this information is usually very limited and provides for substantial anonymity, some users still crave an additional layer of identity protection and decentralization.
The blockchain stores “blocks” of identical information across several points all over its network. As a result, the information stored in the blockchain is generally considered unalterable.
There is one exception to the unaltered blockchain, and we’ll discuss that later. But for now, readers need to understand that the blockchain exists first and foremost to protect the anonymity of users and the decentralized, unalterable nature of an online currency.
The decentralized network provides several unique benefits to users. First, it protects against corruption and tampering. Because the information is incorruptible and stored across multiple networks, it is generally considered free from the possibility of tampering from an outside source.
While some argue that currencies in the real world like the United States currency can be tampered with, subject to changes of an underhanded nature, a cryptocurrency’s price, worth, and location is determined entirely by the market, by the users who create the system. The blockchain makes this possible.
Were it not for the incorruptible nature of the blockchain, the currency would be susceptible to the very same problems which plague modern currencies, online and in the real world. Tampering, editing, and theft can be avoided with a sophisticated blockchain system.
Additionally, the decentralized networks provided by the blockchain gives users a more secure network than the internet can typically provide.
One of the main reasons behind this major benefit is that, because the blockchain stores the information in several incorruptible ‘blocks’ of code and data, the information which holds currency information is largely out of the hands of would-be hackers.
When even the owner of a currency cannot reverse the transaction once it has taken place, it becomes very difficult for those without access to the original transaction to intercept the transport of a virtual currency.
Another major benefit of the blockchain is that applications experience zero downtime. Bitcoin, or other decentralized currencies, can never be switched off. No matter what the situation, consumers can never expect blockchain applications to go down. This means that their worth and value is not dependent on the reliability of their network.
Subsequently, consumers can rest assured that there is no opportunity for clandestine manipulation of the currency based off of hacking attacks which cause it to “go down.”
In summation, consumers need to understand that the blockchain is a very versatile network which provides for the decentralization essential to the backbone of several key cryptocurrencies. Understanding the blockchain and how it works is essential to understand how cryptocurrencies operate in the scope of the online market.
Ethereum Changes The Blockchain
One of the main reasons so many programmers and developers continue to flock towards Ethereum is that the currency represents a revolution in the way that people view the blockchain.
As the above section accounts for, block technology is an easy way to achieve a variety of consumer goals. Particularly when it comes to the prospect of anonymity in transactions, the use of blockchain technology is an essential component to many of the major cryptocurrencies we enjoy today.
Ethereum allows programmers to run their own programs and software on the Ethereum network. More importantly, it allows programmers to convert other programs in separate programming languages into usable, blockchain-enabled programs.
As a result, the entire process of creating a blockchain program has been overhauled, made ten times easier by Ethereum. This innovation lends several real-world industries a potentially revolutionary opportunity.
In the following section, this guide will detail how exactly Ethereum has worked to innovate the process of blockchain-program creation, and how this new opportunity could be applied in a variety of real-world businesses and industries.
Ethereum Virtual Machine
The Ethereum Virtual Machine has been called the greatest innovation of Ethereum. This program is the one that makes it all happen. This Turing-complete software operates entirely on the Ethereum network. It allows any programmer to run any program, regardless of the language it was written in, on the Ethereum network.
This means that virtually any program, if given enough time and memory, can be changed into a decentralized program with all the security benefits of a program with blockchain technology.
This isn’t to say that, before Ethereum, the creation of blockchain-enabled programs was entirely impossible. Before the days of Ether and the Ethereum network, programmers had to go through the painstaking process of creating their own, entirely original blockchain before they could run a program on it.
This means that the creation of a currency would be an extensive project, taking months to years to even make substantive progress.
With Ethereum, this process is streamlined. Instead of creating a new blockchain, those looking to run their new program can simply plug it into the Ethereum Virtual Machine and convert their work into a usable entity on the Ethereum network.
Applications Of Ethereum
First, Ethereum’s primary purpose and application has always been the creation of decentralized applications. Because programs can easily be created which use the blockchain technologies, Ethereum’s Virtual Machine allows programmers to create a variety of programs that have no leader.
Because the information in these programs will be stored in several different, decentralized places, the security of the blockchain becomes even more pronounced, even on programs and organizations with a low budget seeking anonymity.
One of the intuitive applications of Ethereum is the creation of Decentralized Autonomous Organizations. DAOs are coalitions of like-minded individuals which operate outside of the desires or actions of any one leader. These organizations are particularly important in industries that demand privacy and equality in structure.
Unlike the traditional model of an organization with monetary backing, a DAO has no leader; all of the members who own ‘tokens’ in the organization are entitled to voting rights in the happenings of the organization of which they are a part.
Current apps being developed on Ethereum give consumers and researchers a good way to predict the kinds of applications that the Ethereum network provides for.
For example, Weifund is an open crowdfunding platform which converts campaign contributions from users into contractually-backed assets that can be traded within the Ethereum network.
Additionally, programs like Uport are made to store personal information outside of the control of a centralized government.
Using blockchain technology, the creators of this program allow citizens to privately store their information on an entirely decentralized network which cannot fall into the hands of a government or agency which they may not trust.
The Ethereum Hard Fork
As mentioned in the introductory section, Ethereum has experienced a problem that many other contemporary cryptocurrencies have also had to face. After a fierce argument online, members of the Ethereum community executed what the industry calls a “hard fork.”
A hard fork changes the core code in Ethereum, usually to return funds to someone after something bad has happened.
In this particular case, an unknown hacker took advantage of an exploit to hack into, and steal from, a popular Decentralized Autonomous Organization on the Ethereum network. In the end, the equivalent of $50 million USD was taken, lost to an anonymous thief.
The community debated for quite some time, but they eventually decided that the best course of action was to execute a hard fork and edit the code of Ethereum to return the money to the organization.
This was, and still is, a very controversial choice. The precedent of irreversibility is more important to some users than the money that was stolen—and for good reason! Many users feel that a decentralized currency should be truly unchanging.
These users feel that the precedent of never reversing a transaction is what gives a decentralized system its strength.
Because of the major division within the Ethereum community, Ethereum split into two separate entities. Ethereum Classic is identical to regular Ethereum up into the block of information where the hard fork happened. After that, the two blockchains act as separate entities.
For the average user, this split means very little. However, it is important that consumers understand that the hard fork acts as evidence that, though the irreversibility and decentralization of a blockchain is one of its main selling points, it is not infallible—resets do happen.
How To Get Ethereum
Simple Way To Buy It
If you are looking to simply purchase the currency as if it was a stock then there are many options out there for such an investment. Ethereum is the system of currency, but the actual product is called Ether. It is similar to the way we refer to money as the abstract concept, but a dollar is a quantifiable amount of said money.
Ether is the term for a unit of currency that is involved in the Ethereum system of transactions. You can purchase this currency and hope that the price of it goes up so you can make a return on your investment. This way of acquiring Ether is sort of like investing in a precious metal such as gold or silver.
You aren’t actively making and working for this Ethereum, but it is more like an investment. There is a certain exhilarating feeling associated with purchasing a cryptocurrency such as ethereum. It is quite entertaining to know that you have a share in this very niche currency.
Although you are not doing much more than making an investment in Ethereum when you get it this way, it is nonetheless a very intriguing and popular use of the currency.
Investing in Ethereum is a legitimate way to try to get in on this very new and rising cryptocurrency. Everybody has heard of Bitcoin as a cryptocurrency, and many people have had their interest sparked towards these exotic forms of money.
People have been drawn into Ethereum because it provides a certain level of appeal to be on the ground floor or among the first individuals to interact with something that has the potential to be a huge success. It also operates on a very secure system.
They have many people all around the world keep a copy of their Ethereum jobs as well as when one was completed. This process is known as Mining Ethereum, and it is the next way that one can contribute to Ethereum as well as make some Ether simply by allowing your computer to store this ledger of sorts.
Mine For It
Mining is somewhat of an abstract term. What you are actually doing is allowing your computer to become a link in the large chain of Ethereum users and you will allow your computer to receive updates whenever someone near you completes a job and needs to be distributed a certain amount of Ether. You act as a waypoint for this block chain.
It is similar to a bucket brigade. Information comes from one of the main Ethereum operating points out to these miners. Ethereum is like a giant ledger and if you lend your computer to be a miner than you will be sending messages to this ledger whenever Ether needs to be distributed.
It is much easier and more efficient to run a cryptocurrency in this manner instead of having one single computer that could get hacked and have all the data lost. This way of distributing all of the information to miners all across the world has many benefits, and it also has benefits for those who allow their computer to mine for ethereum.
Roughly every 12 seconds one block is added to the blockchain. This means that every 12 seconds somebody is signing their computer to mine ethereum. When a computer does this they sign themselves up to keep and maintain that ledger of Ether distribution.
If one of the main computers were to be hacked or were to fail then the miners would all keep the leger so there would never be much danger to the information. You will be awarded 5 Ether for allowing your computer to do this, but you will also be distributed Ether periodically while your computer is mining.
The amount of Ether varies based on your computer’s processing power. A much better and faster computer will be given Ether far faster than a slow computer, but you will be given Ether nonetheless.
Performing Tasks For It
The reason Ethereum was created was so it could be a currency to facilitate the exchange of goods and services. People who need a job done can put out contracts for people to perform as well as set a level that the worker needs to be paid for doing a task.
It is very much like working at a traditional facility, except online and using a cutting edge form of currency.
For example, say that you own a small company and need a bit of coding done for your software. You put out 5 contracts that have a timeframe as well as a payment of 5 Ether upon completion. This info goes out to all of the blocks around the world, and whoever completes one of the contracts will send it off to one of their local blocks.
Let’s say that one of these coders lives in Brazil. He does the coding and alerts his local block. The Ether is then transferred to his account. This same process occurs for coders in Russia, Australia, France, Mexico, and anywhere else you could possibly imagine.
Once a contract is fulfilled, a message is sent to blocks all around the world and they will know that there are only 4 contracts left to fill. Then 3, then 2, then 1, and then all of the contracts have been completed for that particular job. All of the workers will be paid, and the small business owner is happy that his coding was completed.
This method of distributing work that you need done all around the world has many advantages. You are not limited by geographical factors. Someone could live on the other side of the world and still be able to get this coding job done.
There are many other jobs that exist. A podcast may need an audio engineer to make his podcast sound the best that it possibly can.
How To Use It
No matter which of the above methods to acquire Ether you choose, you are most definitely going to need to get a method by which to exchange, store, and trade Ether. The program known as “Coinbook” does just this. It is an online wallet of sorts. It was designed by a design company known as Engine Collaborative.
They specialize in online design, and saw that there were relatively few products out there for people to manage and view their cryptocurrency.
They took this opportunity upon themselves to develop a marvelous product that simplifies the transaction process and makes it easier for individuals to be drawn to this cryptocurrency because there is no need for an intricate understanding of computer programming or coding.
What Is Its Purpose?
Having reviewed just about everything involved with cryptocurrency, you might be asking yourself “Why is all of this necessary?” or, “What purpose does this serve?”. Well, cryptocurrency has vast and widespread impacts on the way that the world works.
The economics and market variations of cryptocurrencies such as ethereum have changed and evolved vastly over the last decade.
A lot of the utility can be found in the anonymity and disconnect between someone looking to hire people for a specific job as well as those looking to accomplish a job. With a blockchain system such as Ethereum, someone looking to get a job done can simply put out his task with the price he is willing to pay and then wait for people to take up the offer.
He doesn’t have to hardly interact with the people doing the work because it is all managed by a code that tells when to distribute Ether. It is only once the task is done that the individual will be paid.
He doesn’t have to worry about the employer holding up his end of the deal in terms of the payment because the Ether has already left the employer’s account and is just waiting to be distributed to whoever should accomplish the job for him.
The evasiveness and anonymity of Ethereum also lends itself to use by those seeking to have a job accomplished whose legality may be in question. People willing to “do the dirty work” have found employment under many forms of cryptocurrency.
Although they are in the minority of people using the currency, they have become associated with cryptocurrency in general.
When one hears the name Bitcoin they may soon think of drug dealing operations or people seeking to buy illegal materials online; however, many cryptocurrency transactions are just people simply using a form of currency to facilitate the exchange of goods and services in a more anonymous way than traditional currency.
Another beneficial aspect of Ethereum is its inclusiveness and worldwide usefulness. Ethereum is a worldwide currency that is static all around the world. Although the value of Ether is subject to change, it is the same value no matter where in the world you happen to reside.
Local currency has very little, if anything, to do with a cryptocurrency such as Ethereum. It offers a sense of unity to the people of Earth. It is a step towards a global currency and for the broadening of international markets.
People all around the world are flocking to Ethereum because it offers them a connection to the international community that was unmatched. People all around the world are looking at potential contracts to take up for the same result, a bit of Ether. This connects humans in ways that are still unknown.
The purpose of Ethereum is hard to determine because it has so many reasons for being used. Simply put, it exchanges goods and services for a monetary item with which you could purchase goods and services, but there is something special about Ethereum and cryptocurrencies in general.
They are safer than traditional cash. You can’t get “robbed” or lose your money on accident because a record of every transaction is kept on computers all around the world. The purpose may be different for every single person that uses it, but one thing is known.
The benefits as well as the possible detriments of Ethereum or cryptocurrencies in general will make themselves evident over the next few years, and they will forever influence the way that currency is handled across the world.
Final Thoughts On Ethereum
As Bitcoin continues to rise in price, more consumers are exploring the possibility of getting in on the ground floor of a new cryptocurrency.
Readers need to understand that, although Ethereum has a lot of growing up to do, it is certainly making strides in the way of innovation and change. The creation of new blockchain technologies continues to entice many developers to give Ethereum a shot.
Obtaining Ether through a variety of different methods, consumers can get involved with the growing Ethereum community. Healthcare, law, and government are all industries with potential uses for a sustainable blockchain model.
As more and more professionals place growing stock in the importance of anonymity, sustainability, and decentralization, Ethereum has made itself a formidable challenger to even legitimate currencies in the 21st century.
While it may not get quite the publicity of Bitcoin, Ethereum is growing up—and it is definitely growing quickly.