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Ethereum Explained

Ethereum was proposed and developed as a project in late 2013 by Canadian-Russian programmer Vitalik Buterin . The development of the Ethereum project was initially done with the funds raised in the ICO in the summer of 2014 (July). Then Ethereum managed to raise 18 million USD and went public a year later (July 2015).

Ethereum is an open-source project that shares some similarities to Bitcoin. But it’s mostly different in terms of utility, development, and vision. Anyone can participate in the good of the network, either as a developer (by building decentralized applications on this blockchain) or as a user who benefits from the respective dApps. It has a public digital ledger, like Bitcoin; while transactions are public, the identity of users who transact is not known. Ethereum is also censorship-resistant: no central authority controls the network, which means that no one can authorize or prohibit transactions carried out within it.

From the very beginning, Ethereum’s main differentiator has been smart contracts. These are programmed and self-executing contracts that act according to the functionalities given by the programmers and only when the conditions specified in those contracts have been met.

These contracts can be anything from simple agreements between two parties, to platforms such as decentralized autonomous organizations (DAOs) or decentralized applications (dApps). They offer benefits such as automation, transparency and immutability, thus benefiting startups building products and services on the blockchain. They are ultimately the basis for the creation of digital goods and services in a crypto-native economy that affect everything from wallets and accounts to collectibles and financial services. In recent years, a focus on simplifying crypto wallets through “account abstraction” has created a lot of buzz in the Ethereum ecosystem, using small changes built on top of the network to use smart contracts in creative ways for easier and safer user accounts and wallets. You can read more about this on the Oasis blog. 

Ethereum has often been called “a global supercomputer” because it provides a secure and flexible platform for all developers to build, connect and monetize decentralized applications (dApps) dedicated to a multitude of use cases. There are currently thousands of such dApps, catering to a large number of industries. It would not be wrong to name Ethereum as the pioneer of infrastructure for dApps, although in recent years several blockchains have appeared that are starting to build their own ecosystem of dApps (see the case of Polygon for example).

Ethereum has also spawned a multitude of token standards for streamlining the ways that digital assets are engineered, launched and used. The most well-known and used of which are ERC-20 (Ethereum Request for Comments), ERC-721 and ERC-1155. These standards are interfaces that indicate that the token contract responds to a set of commands specific to a particular smart contract. Thus, the standard of a token determines the nature of that token and with which type of network or networks it is compatible.

It can be unequivocally stated that in the last 6 years since the Ethereum blockchain was publicly launched, the world has changed tremendously and will certainly continue this process in the future. Even though Bitcoin and Ethereum are built for very different purposes, they both are essential projects for determining the future of Web3 and all of crypto.