What is Ethereum and how does it work? |
Posted: November 1, 2018 |
What is Ethereum? Ethereum is a digital platform that adopts the blockchain technology established by bitcoin and expands its use to a wide variety of applications. It should not be confused with ether (the underlying cryptocurrency of the network) which is also commonly called ethereum. The Ethereum platform was created in 2015 by the programmer Vitalik Buterin, with the perspective of creating an instrument for decentralized and collaborative applications. Ether (ETH) is a token that can be used in transactions that use this software. Like bitcoin, ether exists as part of an autonomous financial system of peers, free of government intervention. Also as bitcoin, the value of ether has been triggered in a short period of time. In January 2016, ether traded around $1. In September 2017, this price was over $ 290 - although its value has been shown to be volatile, with frequent fluctuations in intraday. Therefore, although this is only one of hundreds of cryptocurrencies, it is also one of the few that have a significant market capitalization, along with its two major rivals, bitcoin and bitcoin cash. How does Ethereum work? The Cryptocurrency Bitcoin Ethereum is very similar to bitcoin, but its programming language allows developers to create software through which to manage transactions and automate certain results. This software is known as intelligent contract. If a traditional contract describes the terms of a relationship, an intelligent contract ensures that those terms are met by writing them in code. These are programs that automatically execute the contract once the predefined conditions are met, eliminating the delay and the cost that exists when executing an agreement manually. To give a simple example, an Ethereum user could create a smart contract to send an established amount of ether to a friend on a given date. They would write this code in the chain of blocks and when the contract is completed (that is, when the agreed date is reached) the ether will be sent automatically. This basic idea can be applied to more complex configurations, its potential being probably unlimited, with projects that have already achieved notable progress in sectors such as insurance, real estate, financial services, legal services and crowdfunding.
Smart contracts also have several additional benefits:
Of course, smart contracts are still a very new system with many details to polish. The code is translated literally, so any errors during the creation of the contract could cause undesirable results that can not be modified.
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