Ethereum cryptocurrency is an open software platform based on blockchain technology. This platform helps developers to build and produce decentralized applications.
Ethereum and Bitcoin are different. But both are built with distributed network technologies known as “blockchain”.
Bitcoin offers an app, a one-tier electronic trading system that allows you to make payments online. It is a cryptocurrency. Bitcoin uses blockchain technology to determine who owns the contract, and Ethereum also uses blockchain as a platform to run almost any decentralized application. Bloomberg described it as "shared software that can be used by anyone, but protected against unauthorized access." So the possibilities are truly endless!
There are many ways to buy Ethereum cryptocurrency contracts: PayPal, credit cards, and more. You can find out more about how buy Ethereum here.
Why was Ethereum created?
The creator and main ideological inspirer of Ethereum is Russian-born Canadian developer Vitalik Buterin. He became interested in cryptocurrencies in 2011, publishing Bitcoin Magazine for a certain time. At the same time, he is studying programming a lot and thinking about creating an improved platform that works on the blockchain.
Ethereum has given new possibilities to create decentralized projects and start-ups based on blockchain and smart contracts.So one of these start-ups is “The DAO”.It is a smart contract-based investment project research platform.Funding for The DAO was one of the biggest successes in history.Thus, the crowdfunding collected 150 million dollars.But a serious source code error allowed the theft of part of the funds (60 million).To recover the stolen funds, it was proposed to reset the network by hard fork, that is to say, changing the protocol of the cryptocurrency.It was not possible to achieve complete consensus on the network, so an Ethereum Classic version appeared alongside Ethereum.Although the protocol change made it possible to recover the stolen investment, it was criticized because one of the fundamental principles of blockchain was violated:irreversibility of operations.
The launch of Ethereum revived the cryptocurrency world by showing the versatility and flexibility of blockchain. The platform's authors implemented cryptocurrency with useful tools for building a start-up or decentralized application without the need for technical training.
How does Ethereum cryptocurrency work?
We mentioned the concept of smart contract as one of the foundations of Ethereum above. It is a computer algorithm that ensures the execution of contracts within the blockchain. Contracts are structured in such a way that the execution of a certain action occurs only when certain conditions are met.
A smart contract can be explained using a simple example of renting an apartment. A prerequisite for using the accommodation is payment. If the tenant pays, they can use the accommodation safely. Otherwise, in theory, the smart contract could be programmed to lock the door locks. And the person will not be able to enter the apartment until they pay the rent.
The example is intentionally simplified, but it explains the purpose and principle of smart contracts in an understandable format. It guarantees decentralization because the tenant and the owner cooperate directly. Welcome to the world of blockchain and crypto-currencies!