Ethereum made it to business headlines yet again earlier last week, but not for the good reasons this time around. Investors suffered a setback on Wednesday as the second most popular cryptocurrency in the world fell victim to a flash crash and its value dropped to 10 cents from $327 (followed by a quick rebound).
It is unlikely, however, that such temporary setbacks would do any permanent damage to the credibility of Ethereum, which currently happens to be the second largest cryptocurrency in circulation, lagging behind bitcoin only.
With its rapidly expanding popularity over time, more and more cryptocurrency investors — first timers and experienced alike — are growing interested in ethereum. If you are one of them with little or no familiarity with this bitcoin alternative, here’s a rundown that should help you get started
What is ethereum?
— Simply put, ethereum can be described as an open software platform powered by blockchain technology that allows developers to build and deploy decentralized applications.
Is there any difference between bitcoin and ethereum in terms of the technologies used in both?
— Just like bitcoin, ethereum is also a distributed public blockchain network. Certain technological dissimilarities exist between the two, the most important of which is the fact that both these cryptocurrencies have been developed for different purposes and they come with different capabilities.
Without delving into the depth of the technical nitty gritty, one could say that bitcoin offers a specific application of blockchain technology, which is to enable a peer-to-peer electronic cash transaction system. In doing so, the bitcoin blockchain tracks ownership of the digital currency.
The ethereum blockchain, meanwhile, executes the programming code of any decentralized application. In this blockchain, miners work to earn ether rather than mining for bitcoins. Ether is a crypto token that powers the network. Apart from being tradeable cryptocurrency, Ether also enables developers to make payments for transaction fees, as well as services on the ethereum network.
Where can you use ethereum?
— Ethereum lets developers develop and deploy decentralized applications or Dapp. Dapps are built to serve a set of specific goals. For example, bitcoin is a Dapp that enables users to do peer-to-peer online bitcoin payments.
Given that decentralized apps are developed using codes that run on a blockchain network, they are not controllable by any agency or individual.
Ethereum allows you to decentralize centralized services. Apart from that, it can also be used to build DAO, acronym for Decentralized Autonomous Organizations. DAOs are basically fully autonomous organizations with no centralized authority or leader. Instead, they are operated by programmatic codes. At its simplest, A DAO is jointly owned by everyone who buys tokens. However, rather than acting along the lines of ownership or equity shares, tokens represent contributions that allow people voting privileges.
What are some of the benefits of ethereum decentralized platform
— There are plenty of benefits, including:
- corruption/tamper proof: Censorship and tampering are basically impossible given that the apps are rooted in on a network run by consensus.
- Immutability: It is impossible for third-parties to implement any changes to data.
- Security: Since apps are secured using cryptographic, they are virtually immune to forgery and hacking attacks.
- No downtime: Apps can not be switched off and neither do they ever go down.