A Beginner’s Guide to Ethereum

Ethereum is a decentralized computing network that allows any agreement to be made and enforced between any parties without intermediaries, giving rise to a trustless and permission-less economy that transcends national barriers. It is a truly global world economy platform that radically empowers users and cuts out traditional middlemen and gatekeepers. It provides a level-playing field for the next-generation economy.

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Ethereum functions as a decentralized network of many computers that distribute data and network functions across the entire web. This gives rise to several advantages, namely: No single point of failure, very reliable, and cost effective. There is no central server in this model, so there is no chance that the people who run the central server could abuse their power.

Decentralized Networks

Ethereum runs on blockchain technology, a decentralized network, where all computers share the same ledger (record) of transactions ordered according to when they happened. Each block is like a page in a ledger book. And each page links to the next, hence, a “blockchain.” These blocks go all the way back to the first “Genesis block”. Miners are special computers who use electricity and computing power to verify transactions on the blockchain. Since this uses real world resources, Ethereum rewards miners with its native token, called Ether.

The Blockchain

Ether

the “crypto-fuel” that keeps the Ethereum network running.

Run Applications

For developers to run programs on Ethereum, they must pay in Ether for each computational step. This is to prevent malicious programs from running to infinity and eating up all system resources.

Reward Mechanism

Ether is the reward given to miners for securing transactions on the blockchain. It is a scarce resource that is required to operate programs on the Ethereum platform. And as long as people are using Ethereum, Ether has real world value.

Smart Contracts and dApps

So what can you run on Ethereum?

Smart contracts and decentralized applications (dApps). Different parties can create a smart contract between them without intermediaries. Add some user interface and deploy them onto the network, and you have a dApp!

Smart Contracts and dApps
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