{"id":1321,"date":"2018-02-08T04:22:30","date_gmt":"2018-02-08T04:22:30","guid":{"rendered":"https:\/\/atozcrypto.org\/?page_id=1321"},"modified":"2018-02-08T09:57:22","modified_gmt":"2018-02-08T09:57:22","slug":"ethereum","status":"publish","type":"page","link":"https:\/\/atozcrypto.org\/ethereum\/","title":{"rendered":"Ethereum"},"content":{"rendered":"
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If you want to know what is Ethereum and how it works and what it can be used for, without going deep into the technical abyss, this guide is perfect for you.
\nImportant Note: This guide assumes a basic understanding of blockchain technology. If you\u2019re unfamiliar with blockchain, check out this step by step introduction for beginners<\/a><\/b><\/p>\n

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What is Ethereum?<\/h1>\n
Beyond Bitcoin & first generation decentralized applications<\/h5>\n

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Although commonly associated with Bitcoin (link to Bitcoin) blockchain technology has many other applications that go way beyond digital currencies. In fact, Bitcoin is only one of several hundred applications that use blockchain technology today.
\nAt its simplest, Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications.
\nLike Bitcoin, Ethereum is a distributed public blockchain network. Although there are some significant technical differences between the two, the most important distinction to note is that Bitcoin and Ethereum differ substantially in purpose and capability. Bitcoin offers one particular application of blockchain technology, a peer to peer electronic cash system that enables online Bitcoin payments. While the Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application.
\nIn the Ethereum blockchain, instead of mining for bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.<\/p>\n

Smart contract<\/u><\/span> is just a phrase used to describe computer code that can facilitate the exchange of money, content, property, shares, or anything of value. When running on the blockchain a smart contract becomes like a self-operating computer program that automatically executes when specific conditions are met. Because smart contracts run on the blockchain, they run exactly as programmed without any possibility of censorship, downtime, fraud or third party interference.<\/b><\/p>\n

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\u201cBitcoin is first and foremost a currency; this is one particular application of a blockchain. However, it is far from the only application. To take a past example of a similar situation, e-mail is one particular use of the internet, and for sure helped popularise it, but there are many others.\u201d<\/i> Dr Gavin Wood, Ethereum Co-Founder<\/span><\/b><\/p>\n<\/div>\n<\/div>\n

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While all blockchains have the ability to process code, most are severely limited. Ethereum is different. Rather than giving a set of limited operations, Ethereum allows developers to create whatever operations they want. This means developers can build thousands of different applications that go way beyond anything we have seen before.
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\u201c [Ethereum] blockchain has some extraordinary capabilities. One of them is that you can build smart contracts. It\u2019s kind of what it sounds like. It\u2019s a contract that self-executes, and the contract handles the enforcement, the management, performance, and payment.\u201d<\/i> Don Tapscott<\/span><\/b><\/div>\n<\/div>\n

The Ethereum Virtual Machine<\/h1>\n

The Ethereum Virtual Machine
\nBefore the creation of Ethereum, blockchain applications were designed to do a very limited set of operations. Bitcoin and other cryptocurrencies, for example, were developed exclusively to operate as peer-to-peer digital currencies.
\nDevelopers faced a problem. Either expand the set of functions offered by Bitcoin and other types of applications, which is very complicated and time-consuming, or develop a new blockchain application and an entirely new platform as well. Recognizing this predicament, Ethereum\u2019s creator, Vitalik Buterin developed a new approach.<\/p>\n

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\u201cI thought [those in the Bitcoin community] weren\u2019t approaching the problem in the right way. I thought they were going after individual applications; they were trying to kind of explicitly support each [use case] in a sort of Swiss Army knife protocol.\u201d <\/i> Vitalik Buterin, inventor of Ethereum<\/span><\/b><\/p>\n<\/div>\n<\/div>\n

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Ethereum\u2019s core innovation, the Ethereum Virtual Machine<\/span> (EVM) is a Turing complete software that runs on the Ethereum network. It enables anyone to run any program, regardless of the programming language given enough time and memory. The Ethereum Virtual Machine makes the process of creating blockchain applications much easier and efficient than ever before. Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of potentially thousands of different applications all on one platform.<\/p>\n

What can Ethereum be used for?<\/h1>\n

Ethereum enables developers to build and deploy decentralized applications. A decentralized application or Dapp serve some particular purpose to its users. Bitcoin, for example, is a Dapp that provides its users with a peer to peer electronic cash system that enables online Bitcoin payments. Because decentralized applications are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.<\/p>\n

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Any services that are centralized can be decentralized using Ethereum. Think about all the intermediary services that exist across hundreds of different industries. From obvious services like loans provided by banks to intermediary services rarely thought about by most people like title registries, voting systems, regulatory compliance and much more.<\/p>\n

Ethereum can also be used to build Decentralized Autonomous Organizations (DAO). A DAO is fully autonomous, decentralized organization with no single leader. DAO\u2019s are run by programming code, on a collection of smart contracts written on the Ethereum blockchain. The code is designed to replace the rules and structure of a traditional organization, eliminating the need for people and centralized control. A DAO is owned by everyone who purchases tokens, but instead of each token equating to equity shares & ownership, tokens act as contributions that give people voting rights.<\/p>\n

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DAO consists of one or more contracts and could be funded by a group of like-minded individuals. A DAO operates completely transparently and completely independently of any human intervention, including its original creators. A DAO will stay on the network as long as it covers its survival costs and provide a useful service to its customer base\u201d .
\n<\/i> Stephen Tual, Slock.it Founder, former CCO Ethereum<\/span><\/b><\/div>\n<\/div>\n

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What are the benefits of Ethereum decentralized Platform?<\/h1>\n

Because decentralized applications run on the blockchain, they benefit from all of its properties.<\/p>\n