Ethereum was first proposed in 2013 by developer Vitalik Buterin, who was a teenager at the time. His idea was to expand the use of blockchain to more use cases than transactions. The platform was officially launched in 2015.
While Bitcoin was created to disrupt online banking and day-to-day transactions. The creators aim to use the same technology to replace internet third parties — those that store data, transfer mortgages and keep track of complex financial instruments.
Ethereum enthusiasts aim to hand control back to users with the help of a blockchain. Developers can use Ethereum to build leaderless applications, which means that user data cannot be tampered with by the service creators.
What Is Ethereum?
It is an open-source platform that uses blockchain technology to create and run decentralized digital applications or DAPPS. Enabling users to make agreements and conduct transactions directly without a middle man.
Operating through a global network of computers that work together as a supercomputer. It runs independent, smart-contract applications since the blockchain is resistant to tampering. Developers are working on the cryptocurrency because of its long-term potential and the ambitious vision to give users more control of their finances and online data.
How is Ethereum different from Bitcoin?
Ethereum draws inspiration from Bitcoin. They are both cryptocurrencies and use the same blockchain technology. Which uses a decentralized public ledger, so the network is not under the control of just one entity.
But, while Bitcoin is used primarily as a store of value. The idea behind Ethereum is to decentralize other kinds of applications and services, from social media networks to more complex financial agreements.
Why is Ethereum sometimes called a ‘world computer?’
Many advocates see Ethereum as a world computer that could decentralize the internet.
With Ethereum, centralized servers are replaced by thousands of so-called nodes run by volunteers globally, thus forming a world computer.
The hope is that one day, anyone in the world will be able to use it.
Is ethereum a cryptocurrency?
Ethereum refers to the digital platform. The actual tokens used for payment on the network are called ether. In other words, ether is the crypto-fuel (or cryptocurrency) for the ethereum network.
When it comes to trading, the prices you see will refer to ether. Nonetheless, you will commonly see the cryptocurrency referred to as ethereum.
How does Ethereum work?
Based on blockchain technology, ethereum consists of a series of cryptographic, or secure, public records linked together and difficult to change. Because they are stamped with user data, time and date, and changes that must be approved by all users.
On the ledger, anyone can create a financial contract or keep debt or ownership registries and eliminate the use of an external recordkeeper or trust officer. They’re called “trustless” transactions because they eliminate the need for trusting the counterparty to the transaction since the contract is self-fulfilling.
It’s worth noting that Ethereum has been met with healthy skepticism. For one, Ethereum is far from scalable, meaning it can’t support many users right now, throwing a wrench in the idea of a “world computer” that disrupts Google, Facebook, and other centralized platforms. Ethereum 2.0, which was launched on Dec. 1, 2020, aims to fix some of these issues. The main impediment for the technology has been that it is tricky for the average person to understand, so until it becomes more broadly accessible, it will struggle with misperceptions.