January 15, 2018
Ethereum is an open-source platform built using blockchain technology that enables the development of decentralized applications that modify and use distributed ledger. Ethereum uses a form of digital currency or accounting unit called
etherto transact with and run applications.
Sometimes the traditional definition of Ethereum can be cumbersome. So instead, let’s try something different a bit different to explain some basic concepts of Ethereum.
Think of yourself as a high seas sailing adventurer who has just landed on a new piece of open territory called Etheria. It’s unpaved, rough and has little more than the dirt and a few trees to use for foundation and building materials. But excitement stirs in your adventurous heart as you see the opportunity to explore and conquer this new world.
Etheruem is a Platform
Ethereum is a platform. Like the shores of Etheria, it represents a new frontier in the virtual landscape that is meant to be built on top of with other software programs and computer applications. The Ethereum protocol itself is very general and provides very little out of the box features.
Ethereum is Open Source
Ethereum is an “open source” piece of software. This means it is a software program that people run on their computer, and any person can access the source code. In our world of Etheria, it means free ability to explore, construct and remix the different parts of the land (as any good pioneer would!). No proprietary barriers, blockades or obstacles preventing our journey to colonize this new land.
This might seem a bit strange at first when you think about existing software. For example, a proprietary piece of software such as Microsoft’s Windows operating system, is closed source and inaccessible to the end user. Open source software on the other hand, any person can freely copy the code, modify or remix the software program to their liking. This is powerful, as anyone can come up with a modification to the code, or submit proposals for upgrades and new features, whereas in a closed system you are at the will of the party distributing the code.
Ethereum is Decentralized
Returning to our brave expedition in this new world of Etheria, there are some peculiarities unlike any other place we’ve ever visited. In particular, no one can claim our new found home in the form a centralized group such as a government or band of explorers. Instead it is owned by all persons who live, use and maintain it. Because of this, we call this world “decentralized”.
Ethereum is decentralized in a similar way. No one can claim to “own” the Ethereum protocol, as it is just a set of instructions for computers to follow when they are running the software in order to do things like run Ethereum applications. Ethereum keeps this decentralization concept in check by creating a game for all computers that run the software to play in hopes of winning a reward. In the process of playing this game, these computers as a whole are creating the entire Ethereum virtual world. So that means the more computers that play the game, the more “decentralized” Ethereum becomes.
Ethereum uses a Blockchain Ledger
As we continue to explore the world of Etheria, we notice there are some strange additions that pop up. In particular, there is a massive digital scoreboard that has sprung up from land since we have arrived and tells us who owns what amount of digital coins. Within this “ledger” every member of Etheria has an account number, to which every other member can what he or she owns - which isn’t much yet since we’re still exploring.
Ethereum is built on a new piece of technology called a Blockchain ledger. It is a basic ledger of accounts that keeps track of the state of accounting in Ethereum, and is kept up to date by the computers playing the game mentioned above.
Ethereum uses Ether
With the morning coming to a close, and afternoon breaking, we are a bit tired from the exploration of Etheria, and desperately need to start building a shelter. After chopping down some trees and getting the bare bones of a shelter erected, the ground below begins to shake. As our feet tremble and balance is challenged, suddenly the work we have put into building our shelter has struck us oil!! How wonderful, we can use some of this oil to power our new home and begin building out our digital village.
Ethereum uses a form of ‘digital oil’ called
ether which is used as both an accounting unit and resource to run digital applications. Ether can be used a form of currency to exchange between accounts in the Ethereum through sending and receiving functions. Ether can also be used as ‘gas’ to fuel applications that are available in this world. For example, if we had a digital notebook application on Ethereum, we might use some ether as fuel every time we save our document. This is because we need to pay for both the action of saving and storage of our file in the Ethereum virtual world.
For computers running the Ethereum protocol, one part of the game they play involves taking requests for computations such as adding, subtracting numbers or saving data from applications that other software developers have built in this digital world. When Ether is being used for such tasks it is called
gas, and is paid as a fee to the computers using their time running your computations. After all, there’s no such thing as a free lunch.
It’s been a long day in Etheria. Let’s recap what we’ve discovered so far:
- Ethereum is an open source software. Anyone can copy, modify or run the code on their computer to help create the virtual Ethereum world.
- Ethereum is a platform. It’s a general piece of software that other developers can build on top of with their own applications such as a digital note book.
- Ethereum is decentralized. Any computer who runs the Ethereum software participates in creating the Ethereum virtual world and in doing so can be rewarded in the form of ether.
- Ethereum has a ledger. The Ethereum software stores a ledger of accounts that all computers running the software can see and manipulate
- Ethereum has a digital oil called ether. Ether can be used as a currency to send and receive with or as a resource to pay for computations to the computers created the virtual Ethereum world!