Menu

Groups4Schools

Ethereum - the next wave of Cryptocurrencies

2009 marked the looming of the first generation of cryptocurrencies, when Satoshi Nakamoto's coin was put into circulation for the first time. Bitcoin has since then posed a threat to the entire financial industry. There is no doubt to the fact that the financial mammoths have been troubled by its existance. 
It was not until 2011-12 that bitcoin started to gain traction. From there on, extensive research and technological advancements have been in full swing in order to harness the overwhelming potential of this disruptive innovation. 
Vitalik Buterin, i.e., the founder of Ethereum, is one such individual whose contribution to this industry cannot be sidelined. He's one of  biggest celebrities of the blockchain movement. 
 
Buterin, a child prodigy, was just 21 when he developed the Ethereum blockchain. His first interaction with cryptocurrencies came along when he used to receive 5 Bitcoins for every article he wrote for a Bitcoin magazine (back in 2011). When he made his first transaction using bitcoins, he was amazed by the immense potential which the coin holds. As he saw the ecosystem maturing, he went beyond the peer-to-peer way of making transactions and introduced the world to an entirely new concept of "Smart Contracts" and 'Decentralised Application platfrom'. His idea was to provide the world with a general purpose blockchain, where individulas and institutions could build their decentralized applications. This marked the advent of the second generation of cryptocurrencies. 
 
Although 'Ethereum' borrowed a lot of concepts from Bitcoin, the Ethereum blockchian opened a plethora of opportunities way beyond the peer-to-peer electronic way of transacting. The 'Ethereum' blockchain has its own native cryptocurrency, 'Ether', and an environment to run the smart contracts known as the 'Ethereum Virtual Machine (EVM)'. In addition to the sending and receiving money on the blockchain, ethereum blockchain can be used to transact loan agreements, insurance contracts, voting contracts etc. to name a few.  
 
 
What are Smart Contracts? Smart contracts are an equivalent of normal contacts, the only difference being that they are completely digital. They are self-executory contracts, which get inforced through the operation of some clever code, as and when the conditions/terms of the contract are satisfied. 
 
For example: If Alice wants to send money to Bob on the condition that Bob mows Alice's garden. Alice can put these terms on a smart contract and can deposit the funds online on the blockchain ledger. Once Bob completes the task, i.e., fulfils the terms of the contract, the funds will get released and get transferred to Bob. 
If Bob fails to complete his task, the money will get refunded and Alice will get her share back. 
 
Since smart contracts are stored on the blockchain, it opens up an unimaginable world of possibilities. Being stored on the blockchain ledger makes these contracts immutable and distributed. Each and every node (person) on the network has a copy of the contract, which provides authenticity and security to the network. 
 
In order to dive fully understand smart contracts, have a look at this amazing video...
 
Smart contracts - Simply Explained
 
 
With smart contracts and general purpose decentralized blockchain for everyone, ethereum can virtually disrupt any industry. In this regard, it would be safe to say that we are transitioning from a "centralized" economy towards a decentralized future, where individuals like you and me will transact through an undefined system of trust, i.e., blockchain. 
Wouldn't that be amazing? I feel excited about this... do you? 
CREDIT: Crypto X