Bitcoin is the origin of cryptocurrency, but Ethereum is an architecture for building decentralized applications. Ethereum is a programmable blockchain. Ethereum has wide-open potential because developers can use it to program smart contracts. Instead of just storing value like the Bitcoin blockchain, Ethereum can store logic. This is a powerful value proposition.
Ethereum is a public, open-source blockchain that functions as a platform for decentralized smart contracts. Ethereum is important to understand because it has features that go well beyond Bitcoin. Bitcoin was designed to transfer value. Ethereum can do more than this by transferring information. This is why Ethereum has become a platform for developing applications on the Ethereum blockchain.
The original Ethereum white paper was published by Vitalik Buterin in 2013. The title of the white paper is “A Next-Generation Smart Contract and Decentralized Application Platform.” Vitalik is very active in the media and has done a wide range of interviews.
Ethereum launched in 2015. The launch was done by Vitalik Buterin and Gavin Wood. This was the origin of smart contracts as a feature of a public blockchain. This gives Ethereum first-mover advantage as a smart-contracts-enabled blockchain, which is key factor in why ETH is the second-largest cryptocurrency by market capitalization.
Ethereum is supported by the Ethereum Foundation. ethereum.org is an educational website maintained by the Ethereum Foundation for helping new users become familiar with Ethereum. It is an incredible resource for learning about how Ethereum works.
Ether (ETH) is the cryptocurrency that functions on the Ethereum blockchain. Ethereum is the platform and ETH is the fuel that powers the platform. ETH is stored in Ethereum accounts.
The Ethereum network runs the Ethereum Virtual Machine (EVM), which is the global “computer” for the Ethereum blockchain. Any participant can broadcast a request for EVM computation, which is a transaction request. Every participant in the Ethereum network agrees on the record of all transactions and the state (status) of the EVM. Code execution updates the state of the EVM. EVM stores a big table of all the Ethereum accounts and their ETH balances, which is part of the EVM state.
Nodes are the real-life machines in the Ethereum network that store a copy of the EVM state. This feature highlights the distributed nature of the Ethereum blockchain. The Ethereum network refers to the Ethereum nodes and their communications.
Users of the Ethereum network pay fees in ETH. These fees are called “gas.” The amount of gas depends on the level of demand for network transactions. Network congestion is a serious issue for Ethereum. Currently, the Ethereum network can only process about 10-15 transactions per second. This is not sufficient scale for current usage, which has increased transaction costs. This is why the developers of Ethereum are working on scalability solutions.
The applications built on Ethereum are called decentralized apps or “dapps.” A decentralized app is an application built on the Ethereum blockchain. Owning ETH allows an individual to use Ethereum dapps. There are dapps for finance, art, gaming, social media, and other categories. Ethereum is the most actively used blockchain because of dapps.
Smart contracts are the code on which dapps are built. Examples of smart contracts on Ethereum are Uniswap and the stablecoins USDC and Dai. One form of a smart contract is a conditional statement for transferring value. For instance, title transfer of a residential building or auto would be a good application of a smart contract. This would make title companies unnecessary.
Etherscan is a Block Explorer and Analytics Platform for Ethereum. The Etherscan website can be used to view the Ethereum blockchain.
There are now competing smart-contract enabled blockchains. For example, NEO is a public blockchain that uses traditional programming languages like Java for scripting contracts. This highlights the growth of the crypto ecosystem, but the dominance of Ethereum is still quite strong.
Be a curious user of Ethereum applications. For instance, make a transaction on Uniswap. Then go to Etherscan and try to understand how your transaction showed up on the Ethereum blockchain. This will help you understand the user experience with the Ethereum blockchain. And possibly what you might like to build!
Ethereum Development
Ethereum is essentially a new “back end” environment in which developers can work. Before you build your own new smart contract, you can interact with existing smart contracts. A good place to start working with Ethereum is to interact with the Ethereum APIs. Ethereum APIs function just like other forms of back end software and offer a way to interact with smart contracts. You can use an API to simply “read” information from the Ethereum blockchain.
You can interact with the Ethereum Blockchain and its ecosystem by starting with one of the “client libraries.” A good one to start with is the ethers.js library. Components of the library can be used to pull data off the Ethereum blockchain.
Reading from the Ethereum blockchain involves pulling information from the blockchain. For instance, you can use an API to “grab” the current supply of Dai. Chainlink can be used to read in a current price feed.
Once you learn how to read from the Ethereum blockchain, you can start writing to the Ethereum blockchain. When you write to the Ethereum blockchain, you are signing and sending transactions. You can use Metamask combined with ethers to do that for you. MetaMask provides a simple and secure way to connect to blockchain-based applications.
After reading and writing to the Ethereum blockchain, then you can get into building your own smart contract. The language for creating smart contracts in Ethereum is Solidity.
The GitHub Repository for Ethereum is https://github.com/ethereum.