The first thing about Ethereum is that it is not a digital currency, rather it is a blockchain based platform having many aspects.
As Explained by Vitalik Buterin, the founder of Ethereum in his interview with Naval Ravikant the Ethereum can be better understood as follows:
Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract(scripting) functionality. Unlike Bitcoin, it is not just a cryptocurrency but it is a blockchain application that supports various other activities along with trading in its digital currency i.e. Ether. Ethereum is blockchain based public ledger that allows for the development and deployment of decentralized applications. The entire platform is fueled via Ether. These crypto-tokens are necessary to develop, deploy and run apps on the Ethereum blockchain. Ether is given as a payment by clients to underlying machines executing operations. It can be acquired by either trading or mining.
EVM: Ethereum Virtual Machine
Ethereum works on an unconventional approach to blockchain development, EVM. The Ethereum Virtual Machine (EVM) is a Turing complete software that runs on the Ethereum blockchain. It allows the execution of code written in any language, given sufficient memory and time are available. Hence, instead of having to build separate blockchain for every application, developers can simply use the existing Ethereum network and run the application of choice. Whoever wants to trade in Ether or who wants to make any sort of payment to any vendor, they can give their Ether coins in a Computer-based system if they have a balance of digital tokens in their account. Then the computer system processes the rest of the transaction.
Ethereum allows developers to develop decentralized applications that run on a blockchain. This is created basically to remove the middlemen in every financial transaction, be it registry of a building, insurance contracts etc. It executes Smart contracts through its blockchain platform and every transaction can be very easily traced in Ethereum. Smart Contracts are blockchain based contracts that are executed as soon the underlying conditions are matched. Since there is no centralized authority, these contracts are free from frauds, interference or speculation. These contracts can be used to facilitate the exchange of anything valuable like money, shares, content, etc.
Future of Ethereum
Ethereum is going to become a very wide and advanced network or blockchain platform, where most of the financial and non-financial activities can be performed such as insurance contracts and payments, the registry of buildings, trade of shares, derivatives, and other commodities etc. Ethereum is included in one of such cases, where its technology will be put to use to meet real-life requirements, specifically meeting the requirement of creating an easier way of space navigation and communication.
Ethereum is going to be a very popular blockchain platform in near future in order to create a safe, secure decentralized and cost-effective way of the network.
- Transparency, Efficiency and accountability increases in the day to day activities.
- Help us to do eliminate the bridge between the third party and user for the financial transaction which increases more security and improved speed.
- Decentralization, which largely removes third-party interruptions in the transaction process.
- Tokenization of real physical assets onto cryptocurrency platforms.