What is Ethereum?
Ethereum is a global, open-source platform for decentralized applications. In other words, the vision is to create a world computer that anyone can build applications in a decentralized manner; while all states and data are distributed and publicly accessible. Ethereum supports smart contracts in which developers can write code in order to program digital value. Examples of decentralized apps (dapps) that are built on Ethereum includes token, non-fungible tokens, decentralized finance apps, lending protocol, decentralized exchanges, and much more.
What is a Smart Contract?
A smart contract is a programmable contract that allows two counterparties to set conditions of a transaction without needing to trust another third party for the execution.
For example, if Alice wants to set up a trust fund to pay Bob $100 at the start of each month for the next 12 months, she can program a smart contract to:
- Check the current date
- At the start of each month, send Bob $100 automatically
- Repeat until the fund in the smart contract is exhausted
Using a smart contract, Alice has bypassed the need to have a trusted third-party intermediary (lawyers, escrow agents etc) to send the trust fund to Bob and made the process transparent to all involved parties.
Smart contracts work on the “if this, then that” principle. Whenever a certain condition is fulfilled, the smart contract will carry out the operation as programmed.
What are the programming languages that are used to write smart contracts on Ethereum?
Who created Ethereum?
Unlike bitcoin in which the creator who is known as Satoshi Nakamoto is unknown. The founding team of Ethereum are known individuals which includes Vitalik Buterin, Mihai Alisie, Anthony Di lorio, Charles Hoskinson, Amir Chetrit, Joseph Lubin, Gavin Wood, and Jeffrey Wilke. Not all the founding members are still with the Ethereum Foundation, as some has moved on to work on other projects. For example, Charles Hoskinson has moved on to work on Cardano, while Gavin Wood has moved on to work on Polkadot.
What is Ether?
While Ethereum refers to the blockchain network. The native currency that flows within the Ethereum economy is called Ether (ETH). Ether is typically used to pay for transaction fees called Gas, and it is the base currency of the network.
What is Gas?
On Ethereum, all transactions and smart contract executions require a small fee to be paid. This fee is called Gas. In technical terms, Gas refers to the unit of measure on the amount of computational effort required to execute an operation or a smart contract. The more complex the execution operation is, the more gas is required to fulfill that operation. Gas fees are paid entirely in ETH.
The price of gas can fluctuate from time to time depending on the network demand. If there are more people interacting on the Ethereum blockchain such as transacting in ETH or executing a smart contract operation, due to the limited amount of computing resources on the network, Gas price can increase. Conversely when the network is under utilized, the market price of gas would decrease.
What options are there to store Ether and ERC-20 tokens?
The 3 most popular Ethereum based wallets are Metamask, MyEtherWallet, and MyCrypto. However there are many other options available as well such as Argent, Trust Wallet, and Coinbase Wallet.
I heard that a new version is launching called Ethereum 2.0. What is that about?
Ethereum 2.0 is an upgrade that aims to solve the blockchain trilemma – security, scalability, and decentralization. In alternative smart contract platforms, they are designed to be highly scalable but compromises on decentralization. Whereas a highly secured and decentralized blockchain network would have the trade off being highly unscalable. Ethereum 2.0 brings a very different flavor of design that aims to addresses those issues by way of using Proof-of-Stake (POS), Beacon Chain, Sharding, and Execution Environment. Due to the complexity of the project, the developement will take place in 3 phases. A Proof-of-Stake Beacon Chain have been deployed and users are staking their ETH as a sign of confidence of the upcoming network. Research and development are still in progress to roll out the remaining phases.