Ethereum Basics
Ethereum is a decentralized, open-source blockchain platform featuring smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform and the second-largest by market capitalization after Bitcoin. Founded in 2015, Ethereum is the brainchild of Russian-Canadian programmer Vitalik Buterin.
What is ETH used for?
Just like Bitcoin and Bitcoin Cash, ETH can be used as a peer-to-peer "permissionless" digital currency. This means you don't rely on an intermediary like a bank or payment provider. Instead, you're free to send and receive ETH to whoever you want - whenever you want - without asking for permission. And just like with Bitcoin, this is done pseudonymously, meaning your identity isn't directly tied to your ETH wallet.
What’s a smart contract?
Think of smart contracts as the code that allows for “programmable money.” They are executed transparently and automatically along the “if this, then that” model.
For use cases that exist entirely in the digital world, smart contracts allow people to bypass intermediaries altogether. A simple example would be a smart contract that governs a trust fund. Here, the contract could be set up to automatically make payments on the first of each month, thereby eliminating the need for lawyers and managed escrow accounts.
Another, slightly more complex example would be a smart contract that governs the issuance of digitized securities. Here, the smart contract can be set up to, for instance, automatically pay dividends to holders of digitized securities. This eliminates the need for rent-seeking central clearing houses in status quo securities markets. In a 'permissioned' environment (where, for example, whitelisted digital wallet addresses are tied to verified identities) a smart contract for digitized securities can also 'bake in' compliance to regulations such as that no single person holds more than 10% of the issued securities. By automating processes using code, smart contracts can reduce regulatory overhead, leading to more efficient capital markets.
What’s a DApp?
A growing number of applications are being created using smart contracts deployed on the Ethereum network. These are known as decentralized applications or DApps. Importantly, DApps are permissionless, meaning anyone is free to use them.
For a simple example of a DApp, imagine a dice game. To play, you send ETH to a smart contract that keeps your bet if you lose, or pays out if you win. Since the contracts that define the game are open source, we can verify, for instance, that the house has a 1% edge. We can also inspect the contract to ensure that the random number generator is indeed random. This transparency makes the game 'provably fair,' unlike traditional casinos which are inevitably plagued by opacity due to their inherent lack of transparency. Also, since identities aren't required to interact on Ethereum, anyone in the world can play our decentralized dice game without restriction.
Why is ETH in the Bitcoin.com Wallet?
In line with our vision of creating more economic freedom in the world, Bitcoin.com is committed to providing safe and user-friendly access to the growing array of use cases and applications in the crypto world, and many of those are built and deployed on the Ethereum network. Having ETH in your digital wallet provides a gateway to the decentralized applications built on Ethereum, which is currently the most actively used blockchain, with the highest number of developers working on it.
As the #2 cryptocurrency by market cap, Ethereum has proven to the world that it provides utility to a wide range of users. Further, the community of users and developers behind Ethereum has many of the same goals as Bitcoin.com. By supporting Ethereum, we hope to build more bridges across the growing cryptocurrency landscape.