Ethereum

The Coins

Beginner

By Matt Hussey

Learn

Jan 21, 2019

Ethereum is a cryptocurrency that allows smart contracts and Dapps to operate on the network. It was created by Vitalik Buterin, a Russian/Canadian software developer and is regarded as an evolution of Bitcoin.

What you will learn

What you will learn

Who invented Ethereum, why it’s different to Bitcoin, what smart contracts are and what you can build on Ethereum

Ethereum is all about re-imagining how the internet works. Buying things, building apps, storing records: Ethereum wants to change all of that.

Our super simple guide will help you understand Ethereum’s big idea and the role Ether plays in that vision.

What is Ethereum?

If Bitcoin is the floppy disk of blockchain, Ethereum is the CD: it’s an evolution of the technology.

Ethereum is a company that wants to change how companies work on the internet. Ether on the other hand, is the cryptocurrency Ethereum uses to build and maintain its network.

Today, companies own and manage all your data. Photos, records, your notes, everything.

Tomorrow, in Ethereum’s vision for the future, you own that data, thanks to Blockchain.

How? Through Smart Contracts. These little bits of code allow people to exchange money, property, shares, anything of value without the need for a middleman i.e. those companies that currently own and manage your data.

Did you know?

Ether’s sub-units, Gwei and Wei are named after Wei Dai, an early pioneer of cryptocurrencies.

Who Invented Ethereum?

A Russian/Canadian computer programmer called Vitalik Buterin wrote the white paper Ethereum is based on.

A brief history

  • 📝2013 - Vitalik Buterin produces a white paper explaining the concept of Ethereum
  • 🗣️January 2014 - Ethereum is publicly announced
  • ₿ July 2014 - Ethereum launches an ICO using Bitcoin to buy Ether
  • 😭June 2016 - $50 million of Ether was stolen from a crowdsale and Ethereum developers agree to reverse the decision by creating a ‘hard fork’
  • 👨‍👩‍👧‍👦March 2017 - a group of companies including Toyota, Samsung, Microsoft, Intel and J.P. Morgan establish Enterprise Ethereum Alliance, a non-profit designed to make Ethereum suitable for big business.

What’s so special about it?

Ethereum is taking the technology Bitcoin is built on and making it more than just a currency.

It allows developers to build apps - they’re called Dapps or ‘distributed apps’ in the Ethereum world - which bundle those smart contracts together into an easy-to-use interface.

Read more about smart contracts and Dapps

You can even build your own currency on top of Ethereum.

Read more about Ethereum's currencies within currencies

If Bitcoin is the gold of the cryptocurrency world, Ethereum is the oil that machines are powered on.

Did you know?

Vitalik Buterin came up with the name Ethereum after browsing Wikipedia articles about elements and science fiction.

How is Ether produced?

In a similar way to how Bitcoin works, miners create Ether by creating blocks and solving puzzles.

Roughly every 15 seconds, a new block is added to the Ethereum blockchain, with the computer or miner that solves the puzzle at the heart of the block being rewarded with Ether.

Read more about mining in our Mining article

How do you get hold of Ethereum?

You can buy Ethereum on an exchange, or you can become a miner yourself!

What can you do with Ethereum?

Lots of things!

  • 👥 Social Networks - Get paid for your posts on social media.
  • 🗄️ File Storage - Decentralised file storage as a fraction of the price.
  • 🚢Overseas Payments - Dramatically reducing the cost of sending cash overseas.
  • 💳Payments Cards - Contactless debit card to pay in Ethereum and other cryptocurrencies.
  • 🤳Online advertising - Cutting out the middlemen in online ads. Users get paid directly for watching online advertisements.
  • ⚖Loans - Blockchain backed loans with no credit checks.

Did you know?

Unlike Bitcoin, Ethereum has no limits to how much Ether can be produced

The future

Ethereum wants to be the platform that all decentralised apps get built on. There are a few challenges it needs to deal with in that journey, which we’ll cover in our Ethereum knowledge tree!

By Matt Hussey

Learn

Jan 21, 2019

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2019 © Decrypt Media, Inc. All Rights Reserved.

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