What is Ethereum, and how does it work?

In this digital age, we are dependant on the internet for almost all aspects of our personal and professional lives. But is the internet functioning today in-line with the ideals based on which it was built?

Centralized corporations have crowded the space to cater to all our needs.

Some of these go by the names of Amazon, Facebook, Google, etc. They store our personal and professional data, sensitive financial information, passwords, and other login credentials.

These ‘internet behemoths’ have time and again compromised user security and privacy with numerous data leaks and hacks.

This shouldn’t come as a surprise as large centralized servers act as a single point of entry for hackers. Folks looking to deal considerable damage to both the company and its users, in all ways imaginable.

Creator Tim Berners Lee didn’t want the internet to be used as a tool to control peoples’ lives. Little did he know that his worst fears would come true.

Blockchain’s Most Avant-garde Application

Bitcoin’s inception in 2009 introduced the world to a truly decentralized, permissionless, and secure form of money. But there was another aspect in Satoshi’s answer to the towering global financial crisis of 2008. A ‘node-based network’ which formed the bedrock of many seminal applications to come – the blockchain.

One of those applications is Ethereum. Bitcoin aims to disrupt banks and ‘third-party’ financial institutions. Ethereum according to the officialwebsitewill be ‘the foundation for a new era of the internet’.

Creating programs and applications on the blockchain earlier was very difficult. Developers who had a sound knowledge of coding, cryptography, and mathematics could only manage to churn out stuff. Ethereum changed all that.

Invented by Vitalik Buterin, it was introduced to the world in 2015 as the first programmable blockchain.

According to Ethereum.org, thousands of developers contribute every day, in building applications for electronic voting, digitally recording property assets to regulatory compliance & trading. Some of them which can be used today are:

• Financial applicationsthat let users borrow, lend, or invest other crypto assets
• Decentralized markets thatallow trading of virtual currencies, or even trade “predictions” about events in the real world
• Gameswhere users can own in-game assets, and can even make real money

By providing developers with the tools to build applications,Ethereumis making all of this possible. But how?

Enter Smart Contracts

A smart contract is a computer program that automatically executes when some specific conditions are met. These programs run on blockchains exactly as programmed without any possibility of censorship, downtime, fraud or third-party interference.

Unlike other payments or financial settlements based blockchain networks,Ethereum allows developers to create whatever operations they want. ‘Decentralized apps’ or dApps tofacilitate the exchange of money, content, property, shares, or anything of value.

But How is Ethereum Different From Bitcoin Though?