What is Ethereum?
Last updated
Last updated
Ethereum is the first platform to combine blockchain and smart contracts. It is a platform that has maintained immovable second place in market value after Bitcoin. In this part, we will look at Ethereum.
Ethereum was created in 2014 by Vitalik Buterin. Bitcoin came out in 2009, so about 5 years later. As described in the previous article, it is a platform where anyone can program the smart contract and upload it to the blockchain. If Bitcoin was the beginning of the blockchain, Ethereum was the turning point to usher in the blockchain 2.0 era and became a sensation in the ecosystem.
Anyone programming a smart contract can create an application by registering the source code on the Ethereum network. The registered application must have various functions. These functions are all implemented as smart contracts and stored on the blockchain, so they are called decentralized applications. In other words, Ethereum is a platform that anyone can create and operate decentralized applications.
It is likely you are already using a lot of applications in the iOS or Android environment. Developers need permission to create applications and register them on the store. On the other hand, since Ethereum is decentralized by the foundation, applications can be developed and registered without restrictions, and this also means they are exposed to threats.
In the most well-known case of The DAO Hack, a smart contract registered on Ethereum was hacked, valued at $60 billion at the time of theft. Some say this is the limit of smart contracts, but since then, an environment that can develop smart contracts more safely and an ecosystem that audits security has been prepared through numerous studies, and it has now developed into a very secure system. Not only did Ethereum play a major role at the center of this change, but it is still the largest platform with the most applications.
Through smart contracts on the Ethereum platform, new systems in the following decentralized environment have been created.
ICO is an abbreviation of Initial Coin Offering. It is a means to collect coins by issuing coins as if issuing stocks, and to develop with the money received. Nowadays, many companies are actively issuing coins, registering them on exchanges, and converting them into cash, which was all unfamiliar before this concept. Listing on the stock exchange is not an easy step, whereas ICO is a smart contract program that issues coins and registers them on the Ethereum network. Anyone can register for a program for ICO, and it serves as a new window to attract investors through white papers, web pages, and community promotions.
The ICO program (smart contract) registered on Ethereum has the advantage of not being forged or falsified, so it can act as a contract between investors and founders. By sending Ether to the founder's ICO smart contract account, the investor can secure a stake in the initial issuance of the coin issued by the founder.
Decentralized Finance, which has now become a popular topic, can also be implemented as a smart contract and registered in Ethereum. Simply put, loans, deposits, interest, and transactions that were in charge of the banking system can now be done on Ethereum. Since it guarantees that the smart contract will operate as it is written, it is possible to organize all processes of money coming and going, depositing, and reclaiming collateral in a decentralized form.
Most people who are new to cryptocurrency will download an exchange app and make a purchase. Although the exchange acts as a trust with all of your rights, smart contracts can take over that role. A type of service that implements this function and registers it with Ethereum is called a Decentralized Exchange. The most popular Uniswap is a good example. You can convert your coins into other coins through DEX.
Non-Fungible Token (NFT), a keyword that is emerging as a hot topic in 2021, can also be issued on Ethereum. NFT, as the name suggests, is a non-fungible token. The value of Bitcoin is the same as another Bitcoin as long as they have the same quantity, whereas NFTs can be said to be unique tokens. The program to issue NFTs is also a smart contract, and it can be registered in Ethereum.
Bitcoin is commonly referred to as digital gold. It has limited use cases but is given the title because it is rare and is appreciated by many people. On the other hand, Ethereum has the title of digital crude oil. Just as the Industrial Revolution developed through crude oil, it means that the blockchain world is developing through Ethereum.
