Cryptocurrency has gone from something you only hear about on the news to a new industry that is experiencing exponential growth and attracting investors who want to get in early. One such cryptocurrency that is already having an impact on the business world and that many people are starting to take notice of is Ethereum (ETH).
This article aims to provide a basic introduction on how ETH works, the best Ethereum wallet, and the potential future of the currency.
What is Ethereum, and how does it work?
Ethereum is a decentralized application or DApp. This means that the program runs on a network of computers and doesn’t rely on a central server. The Ethereum Platform is open source, meaning its design is public, and anyone can take part in establishing consensus across the entire blockchain.
The best way to think about Ethereum is to imagine it as a decentralized computer.
This isn’t an entirely accurate description as it doesn’t consider all the technical details that make Ethereum unique, but it’s a good starting point for those trying to understand how Ethereum works.
How can Ethereum be used to create smart contracts and decentralized applications (DApps)?
As a quick refresher, smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
The beauty behind this system is that when all parties have agreed to the contract, it can’t be changed or manipulated by either party. This eliminates a host of issues associated with using a third party or middleman.
With Ethereum, transactions aren’t processed by a central entity, such as a bank or government, but rather through all nodes on the network working together to process and execute smart contracts. This makes it extremely hard for malicious attempts (i.e., DDoS attacks) to take down or cripple networks in the same way that a government or large bank could.
Since smart contracts aren’t drafted by any single individual, they’re much less vulnerable to malicious attacks than typical applications. This ensures an immutable trail of records and ultimately secures the Ethereum blockchain from malicious attacks that may seek to undermine its core principles, such as immutability.
Blockchains, such as Ethereum’s, offers a transparent and secure way to execute smart contracts. This makes it extremely useful for keeping track of the myriad transactions that take place between people and businesses every day. Rather than requiring participants in financial agreements to trust one another (and hope they will be honest), blockchains enforce the rules of these agreements and hold all participants accountable.
As a decentralized platform for applications and smart contracts, Ethereum allows developers to build and run applications on the blockchain. The decentralized nature of the blockchain helps ensure that no singular person or organization can take control of or manipulate these digital interactions, as their authenticity is verified by an entire network as opposed to one entity.
What are some potential uses for Ethereum in the real world?
Ethereum can be used to secure financial transactions, create transparent organizations, and even create decentralized versions of popular social media applications.
While Ethereum was created intending to allow many types of distributed applications, there are a few core functionalities that it provides for developers to build on top of. Entire businesses are being built using these tools, and there is already a very active market for initial coin offerings (ICOs) using Ethereum.
How to buy and store Ethereum
Ether is a cryptocurrency, just like Bitcoin, except Ether is native to the Ethereum platform. It can be purchased from online exchanges or from individuals directly. Once purchased, it can be stored in a variety of ways, including hardware wallets and paper wallets.
Best ETH wallets:
Trezor, a hardware wallet.
Ledger Wallet, a hardware wallet.
Exodus, desktop software, stores your ETH on your own PC.
Parity, the desktop software, allows you to run Ethereum decentralized apps straight from the browser. Check out more of our Ethereum coverage here.
Edge is an incredible mobile wallet that deals in ETH and many more.
The future of Ethereum
Many developers are working on ways to make transactions cheaper and faster, which is very important as the network becomes more popular. Ethereum has the potential to affect almost every industry, including financial services, social networking, and cloud computing.
Many developers are building applications on Ethereum’s platform-as-a-service offering. The next big thing in Ethereum is decentralized apps (Dapps). Dapps will completely change our world very soon.
