Ethereum explained for normal people

Why you should care, how it works, and why it’s not Bitcoin.

You’ve probably heard a lot about blockchain lately. With Bitcoin’s recent surge in popularity, this new field of distributed cryptographic technology has exploded with companies and blockchains all competing for a piece of the pie.

Bitcoin uses blockchain technology to track transaction of digital currency in a distributed way. Ethereum is a product of that history. As developers started playing with the blockchain, they started to bend and wrap it for purposes other than a digital ledger of currency & transactions.

Ethereum is a product of those struggles: claiming the title of a “next generation” of blockchain. Initially proposed as an update to Bitcoin, Ethereum allows for much greater freedom for developers to explore and execute code on the blockhain, through something called “smart contracts”.

Ethereum has it’s own blockchain, separate from Bitcoin, that contains bits of code that can be executed automatically when a set of criteria are met. Exactly what that code does is up to the developer who makes it, which is the key differentiator here.

Untapped potential

Although we don’t know what it will be used to do in the future, it has the potential to redefine entire industries, automating and decentralizing processes in a wide variety of places.

By cutting out the middle-man (decentralizing), Ethereum has the potential to reduce fees, and increase efficiency, and security on traditional industries that rely on a trusted third-party to facilitate a service or transaction.

Is that gibberish? Let’s bring it down to Earth: Using Ethereum, IBM created a washing machine that could order its own detergent when it ran out, call a repair technician when it broke down, and optimize to run the wash when electricity was the cheapest. That’s just one small example of how this technology can be used to smartly automate our lives. Applied to the business sector, the possibilities are endless.

What is Ether?

Ether is a digital currency. It’s like Bitcoin. Each transaction on the network costs some Ether (ETH), and the nodes that commit their resources to securing processing the transactions are rewarded with newly minted ETH.

Like Bitcoin, no one owns the network. It is distributed and decentralized. It’s open-source, and built by many people all over the world, one little chunk (or “block”) at a time.

Although Ether is distinct from network, many people use “Ether” and “Ethereum” interchangeably nowadays, so watch out.

If you’re unfamiliar with blockchain, you may want to read “Bitcoin & Blockchain Explained for Normal People” before continuing.

What is a smart contract?

A “smart contract” is a fancy way of describing the small, self-contained computer code stored in a block on the Ethereum network. A “smart contract” can do whatever the person who coded it wants it to do: usually exchanging money, content, property or other things of value (like the adorable Crypto Kitties).

The smart contract is it’s own little computer program. Kind of like your Twitter App on your phone, but way dumber. In web development terms, they operate more like a component or function than a complete piece of software. Each smart contract automatically executes when a set of conditions (coded into it) are met.

This is the key differentiator between Ethereum and other blockchain technologies that are basically just digital money. Ethereum has a digital coin, which helps incentivize participation in the network and rewards folks who verify the transactions and help keep the network secure, but that’s a clear by-product here, and not the core use.

A lot of blockchain networks have the ability to execute code, Ethereum is the leader in the smart contract space because they allow developers to do basically whatever they want with the code, while most other blockchain severely limit the kinds of operations that are allowed on their network.

Who is Vitalik Buterin?

One of the major ways Ethereum is so different from other Bitcoin has nothing to do with the technology; compared the mysterious identity of Bitcoin’s creator Satoshi Nakamoto, the man responsible for creating Ethereum lives a fairly public life. Vitalik Buterin is profiled on Vice News (bonus scene here) in between jet-setting around the world to evangelize cryptography, blockchain and Ethereum.

When it comes to making headlines, he’s no Elon Musk, but give him a few years we’ll see. The boyish Russian-born, Canadian-raised programmer was an early adopter of Bitcoin. He co-founded Bitcoin Magazine back in 2011, when the crypto space was still finding it’s footing and didn’t demand hardly any media attention outside of libertarians and academics.

Vitalik doesn’t control Ethereum (no one does), but he its public face. His non-stop diplomacy tour sent him to Singapore, Russia, China, Thailand and the US last year.

Chloe Cornish does an amazing job retelling her time spent with the programmer-turned-crypto-ambassador in this piece for The Financial Times.

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Beginners Guide to Ethereum

This is an amazingly simply infographic on the main topics covered in this article.

Blockgeeks “What is Ethereum” Guide

This is a disjointed, but informative high-level view on Ethereum.

What’s the Difference? Ether vs. Etheruem

Good detailed look at the two terms.

What is Etheruem?

The official Ethereum documentation. Easier to read than you might expect…

Front End dev + Solution Architect. Read The Web Performance Handbook —

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