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If you are into cryptocurrency or decentralized applications, you might already know that Ethereum will change the world. If you have no idea what those words I just wrote mean, an overview starting with Bitcoin will certainly be helpful.
Ethereum is based off of Bitcoin technology.
Ethereum took the basics of Bitcoin and expanded it.
Bitcoin was the first major cryptocurrency/decentralized money widely available. Before Bitcoin, a consumer would swipe a credit card, use a check, or pay in cash for any type of goods. All the money consumers used was out of a centralized system: AKA banks. Bitcoin takes the third party away from transactions and trading.
How does that work with out a third party? Let me explain.
Bitcoin works off of the concept of blockchain technology. Blockchain is the decentralized system where the trading of cryptocurrency happens. It is decentralized, meaning not one entity tracks the transaction.
The shifts from centralized currencies to decentralized is becoming very apparent.
Ethereum's goal is for everyone to become less reliant on centralized systems.
The idea of decentralized money gave way to the idea that other things can be decentralized as well! Ethereum takes Bitcoin to the next level in this regard. Although it does have its own currency, it also acts as an all-inclusive decentralized network.
Major sites you use everyday are centralized (they have a third party tracking what you're doing). Some of these centralized sites are Google, Facebook, eBay, Amazon etc.
Now instead of worrying about a third party though, everything can be done through blockchain technology and smart contracts (which you will read about below).
Ethereum helps create more blockchain programs.
Ethereum has a board of directors that created this technology. The reason why Ethereum was created in the first place is written pretty plainly on their website as their mission statement:
"The Ethereum Foundation’s mission is to promote and support Ethereum platform and base-layer research, development and education to bring decentralized protocols and tools to the world that empower developers to produce next generation decentralized applications (dapps), and together build a more globally accessible, more free and more trustworthy Internet."
The Ethereum Foundation invites developers from all over the world to work with their blockchain technology and create Dapps that have all sorts of functions. One way Ethereum Dapps can change the world is by inventing new ways to transfer property, funds, debts, etc. The public would be able to use the applications in their everyday lives without needing a third party for anything.
Smart contracts are now available to the public.
The reason these Dapps are special or different from other applications is because of smart contracts.
Smart contracts will bring blockchain to the masses because they explicitly follow their programming. There are no errors or even the possibility of errors. There is no censorship, fraud, or third-party interference when it comes to the programming. It is the most reliable way to transfer property.
Smart contracts allow developers to create applications that don't need intermediaries, like lawyers, to work out the finer points of a will, as well as any other type of contract for that matter. Whatever the will says, the smart contract will follow through on. Neither party would have to worry about the outcome because of how reliable the programing of the smart contract is.
Ethereum has its own currency.
I mentioned earlier that Ethereum is more than just a platform for blockchain technology. The creators of Ethereum also created Ether, a forum of currency.
If Bitcoin is the gold medalist of cryptocurrency, then Ether is the silver medalist. Ether is second most common type of cryptocurrency, followed by Ripple, who wins the bronze medal.
Ether is the life force of Etheruem. It keeps programmers honest, and makes sure that everybody is keeping their end of the deal during transactions on the Ethereum blockchain.
Say you don't have Ether but want to use the Ethereum technology? Well, you can easily trade your Bitcoin for Ether. If you don't have any cryptocurrency and are starting from scratch, there are also multiple sites you can use to buy Ether.
An Ethereum wallet is readily available to you.
Another way to get and hold your Ether is through the Ethereum Wallet. You can download the wallet on any device running virtually any software (i.e. Linux, Windows, iOS).
The Ethereum Wallet not only holds your cryptocurrency, it allows you to be involved with the Ethereum network. With the wallet, you can create smart contracts of your own.
There is an official Ethereum Wallet that the company suggests using on its site. That doesn't mean, however, there aren't other options. One quick search for "Ethereum Wallets" on Google brings up dozens and dozens of options to choose from.
The ample amount of choices with these wallets is just one more reason why Ethereum will change the world.
Anybody can create their own cryptocurrency.
A few paragraphs up I mentioned the first, second, and third place popularity of cryptocurrency. That list could have gone on and on. However, Ethereum makes it possible for that list to extend to infinity. One of the facts about Ethereum you didn't know is that while using the Ethereum wallet and technology, developers can create their own type of cryptocurrency!
If you want to get technical (which we are), it's not exactly another type of cryptocurrency. Developers can create their own type of tradable token, unique to their own smart contracts and programs. They can make a fixed supply of these tokens, and they can even create a type of bank inside of the blockchain technology to issue their cryptocurrency. The token can then be transferred into Ether to be used as currency.
The options are limitless inside of Ethereum, which gives developers a type of creative reign that hasn't existed before.
Vitalik Buterin saw Ethereum's endless potential and wanted to share it with the world.
Vitalik Buterin isn't another program, or type of cryptocurrency. Vitalik Buterin is the creator of Ethereum and Ether. His biography on the Ethereum website describes his journey to creating Ethereum starting with an interest in Bitcoin.
He first discovered blockchain and cryptocurrency technologies through Bitcoin in 2011, and was immediately excited by the technology and its potential. He cofounded 'Bitcoin Magazine' in September 2011, and after two and a half years looking at what the existing blockchain technology and applications had to offer, wrote the Ethereum white paper in November 2013. He now leads Ethereum's research team, working on future versions of the Ethereum protocol.
Buterin is the main reason why Ethereum will change the world. He saw the potential that blockchain technology had, and knew other applications, besides Bitcoin, could prosper using similar ideas.
With Buterin's brainchild, Ethereum, there are new smart contracts and programs being developed every day that never would have been created otherwise.
Ether mining gives back to the blockchain technology its created from.
You might be familiar with Bitcoin mining. Millions of computers around the world solve Bitcoin puzzles to uncover more Bitcoin and get it into the hands of consumers. Ether mining is similar, but has a few differences.
Ether mining takes tons of computing power to get Ether into the hands of users. As I mentioned earlier, Ether is what keeps the blockchain running smoothly. Ether isn't just a form of currency for Ethereum, it also helps create the literal blockchain network that Ethereum runs on. So mining it is essential for everyone involved.
However, it is important to note that there is not an endless supply of Ether to be mined. Only 18 million Ether will be available each year.
If you're thinking about mining your own Ether, be aware it takes a lot of computing power and electricity to do so. To even think about mining Ether, you'll need at least 30 gigabytes of free space on your hard drive.
The future of Ethereum is always changing.
The future of Ethereum will change the world. The creators are working on a concept that will eventually do away with mining completely. It's called Proof of Stake (PoS).
With mining, individual miners compete to get each Ether. Whoever is the fastest will get the reward. With PoS, developers of a specific block in the blockchain will be in charge of attaining their Ether. Proof of Stake will make the "mining" process of Ether more simple, quicker, cheaper, and will be better for the environment because it uses less electricity and power.
However, the update on Ethereum that will change the mining process to Proof of Stake won't happen until mid-2019 at the earliest! If you still want to get ahead of the game and mine Ether, you should start right away. The ultimate guide to mining Ethereum is just a click away.