Ethereum...

Ethereum is a decentralized computing platform. You can think of Ethereum as a desktop or laptop computer, but it does not run on a single device. Instead, it runs simultaneously on thousands of machines from all over the world, which means Ethereum has no owner.

Like Bitcoin and other cryptocurrencies, Ethereum allows you to transfer digital money. But it has the capacity to do much more than that. For example, you can create your own code and interact with applications created by other users. All kinds of sophisticated programs can be made available on Ethereum because it is very flexible.

In its simplest form, the main idea behind Ethereum is that developers can create and make available code that runs on a distributed network rather than a central server. So theoretically, these apps cannot be shut down or censored.

What makes Ethereum valuable?

We briefly mentioned that Ethereum can run codes on a distributed system. Therefore, outside parties cannot manipulate the programs. These codes are added to Ethereum's database (eg blockchain) and can be programmed to be unmodifiable. In addition, the database is publicly viewable so users can audit a code before interacting with it.

This means anyone can unlock apps that cannot be taken offline from anywhere. More interestingly, since the native unit, ether, stores value, these applications can set conditions for value transfer. These programs that create applications are called smart contracts. In most cases, they can be configured to operate without human input.

Predictably, the idea of ​​"programmable money" has attracted users, developers, and businesses from all over the world.

What is the difference between Ethereum and Bitcoin?

Bitcoin uses blockchain technology and financial incentives to create a global digital currency system. It has introduced some key innovations that allow users in different parts of the world to coordinate without the need for a central party. With each participant running a program on their own computer, it has become possible for users to reach consensus on a financial database within a trustless, decentralized environment.

Bitcoin is often referred to as the first generation blockchain. It was not created as a very complex system and this feature offers strength in terms of security. It is designed to be particularly inflexible so that security is prioritized as the base layer. Thus, the smart contract language in Bitcoin is extremely restricted and does not succeed in incorporating applications other than money transfer.

In contrast, second-generation blockchains have more capabilities. These platforms allow a higher level of programmability in addition to financial transactions. Ethereum gives more freedom for developers to experiment with their own code and create Decentralized Applications (DApps).

Ethereum is the first of the second generation blockchain wave and has remained at the forefront to this day. It shows similarities to Bitcoin and can perform many of the same functions. But the two blockchains are very different from each other and each has its own advantages over the other.

How does Ethereum work?

We can define Ethereum as a state machine. This means you have a snapshot of the current view of all account balances and smart contracts at any given time. Certain actions cause the state to update, meaning all nodes update their snapshots to reflect this change.

Smart contracts running on Ethereum are triggered by transactions (from users or other contracts). When a user sends a transaction to a contract, each node on the network runs the contract and records the output. This is done using the Ethereum Virtual Machine (EVM), which translates smart contracts into instructions that computers can read.

A special mechanism called mining is used to update the status (for now). Mining is done with the Proof of Work algorithm, similar to Bitcoin. We will talk about this in detail in the next sections.

What is a smart contract?

A smart contract is just a code. Code is not a smart or contract as we know it. But the code is called intelligent because it implements itself under certain conditions, and is in a sense a contract because it ensures the fulfillment of agreements between the parties.

Computer scientist Nick Szabo came up with this idea in the late 1990s. He used the example of a vending machine to explain the concept and stated that vending machines can be considered as the predecessor of modern smart contracts. In the vending machine example, there is a simple contract being implemented. The user throws a coin into the machine and the machine gives the product the user wants.

A smart contract applies the same logic in digital terms. When two ethers are sent to this contract, the code says "Hello, World!" You can enter a simple condition such as send your reply.

Who created Ethereum?

In 2008, an anonymous developer (or developer community) published the Bitcoin whitepaper under the pseudonym Satoshi Nakamoto. As a result, the world of digital money has changed permanently. A few years later, a young programmer, Vitalik Buterin, started thinking about taking the idea one step further and finding a way to use it in all kinds of applications. The concept eventually emerged as Ethereum.

Ethereum was coined by Buterin in 2013 in his blog post Ethereum: The Ultimate Smart Contract and Decentralized Application Platform. In this post, Buterin explained the idea of ​​a full Turing blockchain, a decentralized computer that can run any application given enough time and resources.

Over time, the types of applications that can be used on a blockchain have become limited only by the developer's imagination. It aims to find out whether the Ethereum blockchain technology has valid uses outside of the deliberate design limitations of Bitcoin.

How was Ether distributed?

Ethereum was launched in 2015 with an initial supply of 72 million ether. More than 50 million of these tokens were distributed in a public token sale called the Initial Coin Offering (ICO), where participants can purchase ether tokens in exchange for bitcoin or fiat currencies.

source: academy.binance.com