What is Ethereum?

Is Ethereum just another Cryptocurrency? No. Ethereum has been called the future of the internet or Internet 2.0 or the backbone of the internet. All of those terms can be applied to Ethereum if it gets large enough. But what is Ethereum really?

Decentralized Internet:

Ethereum is a decentralized internet competitor. What does this mean?

Our interactions on the internet fall under a client-server model. Today most of our data is stored in the cloud or servers owned by companies like Amazon. These companies keep track of, store, and protect your sensitive private information on their servers and computers. For example, Alphabet holds all of your Gmail emails in a server somewhere.

This setup has some conveniences like reduced upload and download times and reduced costs. But this leaves important data centralized in a relatively few number of places across the internet.

But centralization is a dangerous thing. Often, Hackers or governments, can locate these third-party servers and gain unwelcome access to your information. They can easily steal, leak, or change important data belonging to you. Making your information at greater risk. Ethereum is trying to solve that.

Ethereum is trying to decentralize the client-server based model of the internet. The servers and cloud would be replaced by nodes. Nodes are computers ran by volunteers which participate in the Ethereum network. These nodes can do a variety of things: Keeping a full copy of the blockchain or by verifying transactions made on the blockchain (mining). But they all help to secure the network against attack, and receive Eth for helping the network. You might notice this sounds alot like bittorrent, which is true, it’s fairly similar – but completely legal.

However, Ethereum is much more than a decentralized client-server model. It also can run applications using smart contracts. The smart contracts are pieces of code which operate exactly as coded. You could code a contract to give someone important medical information every month and it would do so without a hitch. The only possible hold up is how well optimized the code on the Ethereum network. If it’s poorly optimized the developer (or sender) has to purchase more Eth (ethereum’s currency tradable on exchanges) to operate the contract. That’s the incentive the network has to keep costs low and transaction times down. The code needs to be smooth and optimized.

Conclusion:

The real power of Ethereum isn’t Eth as a coin but Ethereum as a decentralized network. Further, it helps secure your sensitive data by eliminating the centralized failure point. If you believe in Ethereum’s idea and the need for increased security across the internet, you might consider owning some Eth. As the theory is, with increased development on their platform, the more demand there is for Eth, with more demand brings higher prices. 

Finally here’s a nice little infographic (Courtesy of /u/cryptoinna) going over a few things I didn’t cover in this article, but might in the future.

The graphic covers a little more than I have. This is meant to be piece of a longer set of articles.