What is Ethereum?

Before you can understand ethereum, it helps to first understand the internet.

Today, our personal data, passwords and financial information are all largely stored on other people's computers – in clouds and servers owned by companies like Amazon, Facebook or Google. Even this CoinDesk article is stored on a server controlled by a company that charges to hold this data should it be called upon.

This setup has a number of conveniences, as these companies deploy teams of specialists to help store and secure this data, and remove the costs that come with hosting and uptime.

But with this convenience, there is also vulnerability. As we've learned, a hacker or a government can gain unwelcome access to your files without your knowledge, by influencing or attacking a third-party service – meaning they can steal, leak or change important information.

Brian Behlendorf, creator of the Apache Web Server, has gone so far as to label this centralized design the "original sin" of the Internet. Some like Behlendorf argue the Internet was always meant to be decentralized, and a splintered movement has sprung up around using new tools, including blockchain technology, to help achieve this goal.

Ethereum is one of the newest technologies to join this movement.

While bitcoin aims to disrupt PayPal and online banking, ethereum has the goal of using a blockchain to replace internet third parties — those that store data, transfer mortgages and keep track of complex financial instruments.
The 'World Computer'
In short, ethereum wants to be a 'World Computer' that would decentralize – and some would argue, democratize – the existing client-server model.

With ethereum, servers and clouds are replaced by thousands of so-called "nodes" run by volunteers from across the globe (thus forming a "world computer").

The vision is that ethereum would enable this same functionality to people anywhere around the world, enabling them to compete to offer services on top of this infrastructure.

Scrolling through a typical app store, for example, you'll see a variety of colorful squares representing everything from banking to fitness to messaging apps. These apps rely on the company (or another third-party service) to store your credit card information, purchasing history and other personal data – somewhere, generally in servers controlled by third-parties.

Your choice of apps is of course also governed by third parties, as Apple and Google maintain and curate (or in some cases, censor) the specific apps you're able to download.

Take the example of an online document service like Evernote or Google Docs.

Ethereum, if all goes according to plan, would return control of the data in these types of services to its owner and the creative rights to its author.

The idea is that one entity will no longer have control over your notes and that no one could suddenly ban the app itself, temporarily taking all of your notebooks offline. Only the user can make changes, not any other entity.

In theory, it combines the control that people had over their information in the past with the easy-to-access information that we're used to in the digital age. Each time you save edits, or add or delete notes, every node on the network makes the change.



It's worth noting that the idea has been met with skepticism.

Although the apps appear to be possible, it's unclear which blockchain applications will actually prove useful, secure, or scalable, and if they will ever be as convenient to use as the apps we use today.

Authored by Alyssa Hertig; Images by Maria Kuznetsov; Coindesk

NEXT: WHAT IS ETHER?

INDEX: A BEGINNERS GUIDE TO BITCOIN AND BLOCKCHAIN TECHNOLOGY



What is Bitcoin?
It’s a decentralized digital currency


Why Use Bitcoin?
It’s fast, cheap to use, and secure


How Can I Buy Bitcoin?
From an exchange or an individual


How to Buy Bitcoin in the UK
Buying bitcoin in the UK


How to Store Your Bitcoin
Use a digital or paper wallet


What Can You Buy with Bitcoin?
Spend your bitcoins


How to Sell Bitcoin
A guide on how to sell your bitcoins


How to Accept Bitcoin Payments for Your Store
Learn about bitcoin POS systems


How do Bitcoin Transactions Work?
Bitcoin addresses and private keys


Is Bitcoin Legal?
The current regulation around bitcoin


Who is Satoshi Nakamoto?
The founder of bitcoin


How Bitcoin Mining Works
By confirming transactions


How to Set Up a Bitcoin Miner
Generate bitcoins yourself


What are Bitcoin Mining Pools?
What are pools how and how to join them?


How Does Cloud Mining Bitcoin Work?
Alternative bitcoin mining solutions


How to Calculate Mining Profitability
Can you make a ROI?


How to Make a Paper Bitcoin Wallet
Creating an unhackable bitcoin wallet


Can Bitcoin Scale?
A look at the debate and the tech


What is SegWit?
A new way of storing transaction data


What is the Lightning Network?
Off-chain transaction channels


What is Bitcoin Cash?
Same blockchain, different characteristics.


Hard Fork vs Soft Fork
Why and how do blockchains split?


What is the Difference Between Litecoin and Bitcoin?
It’s the silver to bitcoin’s gold


How to Buy Litecoin
How to buy the bitcoin alternative litecoin


How to Mine Litecoin and other Altcoins
How to generate your own altcoins


Understanding Bitcoin Price Charts
A primer on bitcoin price charts


Bitcoin E-Commerce Services for Merchants
How to accept bitcoin at your business


What is Blockchain Technology?
A system of distributed data and logic


How Does Blockchain Technology Work?
Cryptographic keys, distributed networks and network servicing protocols


What Can a Blockchain Do?
Identity, recordkeeping, smart contracts and more


What is a Distributed Ledger?
A dynamic, independently maintained database


What is the Difference Between Public and Permissioned Blockchains?
Can anyone read or write to the ledger?


What is the Difference Between a Blockchain and a Database?
It begins with architectural and administrative decisions


What Are the Applications and Use Cases of Blockchains?
Tokenization, auditing, governance, settlement and more


How Could Blockchain Technology Change Finance?
Cross-border payments, new asset classes, regulatory compliance and more


What are Blockchain’s Issues and Limitations?
Complexity, size, costs, speed, security, politics and more


Why Use a Blockchain?
To manage and secure digital relationships as part of a system of record


What is Ethereum?
A blockchain application platform and ‘world computer’


What is Ether?
The ‘fuel’ of the ethereum network


How to Use Ethereum
Wallets, trading and ‘dapps’


Who Created Ethereum?
Vitalik Buterin


How Ethereum Mining Works
‘Proof of Work’ and ‘Proof of Stake’


How to Mine Ethereum
GPUs, mining software and pools


How Ethereum Works
‘Turing-complete’ programming, ‘state’ and the ‘EVM’


What is a Decentralized Application?
A distributed ‘smart contract’ system


What is a DAO?
A ‘decentralized autonomous organization’


How Do Ethereum Smart Contracts Work?
Code, transaction fees and ‘gas’


How Will Ethereum Scale?
‘Sharding’ and ‘off-chain’ transactions


What is an ICO?
Initial Coin Offerings refer to the distribution of digital tokens.

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