fbpx

cryptocurrency

What is Ethereum?

No account yet? Register

overview

So you’ve heard of Bitcoin… but what is Ethereum? This technology is more than just digital money, and you’re going to want to know about how it works. In this lesson, we breakdown what you need to know about Ethereum!

lessons in this course

Share on facebook
Share on twitter
Share on linkedin
Share on email

what's in this lesson

What is Ethereum?

The big idea behind Ethereum is that anybody can use its decentralized network to create and run decentralized applications. This is how Ethereum aims to remove power from big companies and give the power to you.

 

Ethereum vs. Bitcoin

 

Sooo if Ethereum & Bitcoin are both considered to be crypto… what’s the diff? 

 

To break it down simply Bitcoin is like digital gold (just currency), while Ethereum is a super-computer. Both systems are powered and secured by a decentralized network of individual computers across the world known as the peer-to-peer network and they both use the blockchain technology.

 

Ethereum was inspired by Bitcoin & the whole blockchain technology, but it essentially “upgraded” upon Bitcoin with the addition of something called “smart contracts” (more on this in a minute). The big idea behind Ethereum is that anybody can use this decentralized network to create and run decentralized applications (called dapps). No permission is needed because third parties (like the Apple App Store) are no longer required.

 

Here’s a lil analogy for ya. Bitcoin is to email, as Ethereum is to the actual web browser. This is because Ethereum’s main “goal” is to enable programs users can interact with and create whereas Bitcoin is for transactions. 

 

What is a smart contract?

 

“Smart Contracts” can run apps, exchange money and other value, and send information. Essentially, they put agreed-upon rules into computer code and then enforce them automatically.

 

Writer Nick Szabo uses the vending machine analogy when describing smart contracts. Think of them this way: If you put in $2 into the vending machine but the bag of Fritos you want are $2.50, no chips for you. If you insert $2.50… yay Fritos! If you put in $2.50 but the Fritos are sold out, you’ll get a refund. 

 

Once these “rules” are agreed upon, they run on their own thanks to computer code, that means no one can change them — which makes sure everything is fair & square for all parties involved. 

 

Ways to use Ethereum

 

It can be very confusing to imagine this whole invisible network of transactions going on, especially when you start to think about how it actually works. I mean, I still don’t really get how the internet is a thing?! It’s just there?

 

Thinking about some of the ways Ethereum can actually be used might help put it all into perspective. 

 

Peer-to-peer Marketplaces

 

You could use Ethereum to create various “marketplaces” where shoppers can pay sellers directly. For example, artists can sell music directly to their fans, instead of using third parties like Apple or Amazon. Music could become cheaper and the artists would still get a larger cut. In fact, this is happening now with sites like audius.co!

 

Peer-to-peer Insurance

 

You could use Ethereum to create insurance policies that are automatically sold and managed on peer-to-peer systems. For example, imagine car insurance that automatically charges you a small amount for ONLY the miles you ACTUALLY drive. Insurance could become cheaper and more customized! 

 

The Sharing Economy

 

You could use Ethereum to turn the things you own but rarely use into income-producing property. Think Airbnb, without the fees. 

 

For example, imagine if others could use your car, your vacuum, or even items such as your couch when you don’t need it – and you automatically get paid. Right now you could use platforms like Airbnb for home sharing, Turo for car sharing, Curb Flip to sell any empty parking spots, Spinlister for bike sharing, etc (if you didn’t know about some of these check them out if you want to make some extra cash!). Anyways, with Ethereum everything could be managed peer-to-peer rather than peer-to-company-to peer. 

 

And you’re probably wondering “what about if something goes wrong and someone steals my car?”. Well, insurance and theft protection could automatically be built into these systems for peace of mind the same way it’s built into third-party services.

 

There are a TON of other ways that people are using Ethereum to build, but these are some of the most exciting ways Ethereum could be used in the future!

No account yet? Register

cryptocurrency

What is Ethereum?

So you’ve heard of Bitcoin… but what is Ethereum? This technology is more than just digital money, and you’re going to want to know about how it works. In this lesson, we breakdown what you need to know about Ethereum!

What is Ethereum?

The big idea behind Ethereum is that anybody can use its decentralized network to create and run decentralized applications. This is how Ethereum aims to remove power from big companies and give the power to you.

 

Ethereum vs. Bitcoin

 

Sooo if Ethereum & Bitcoin are both considered to be crypto… what’s the diff? 

 

To break it down simply Bitcoin is like digital gold (just currency), while Ethereum is a super-computer. Both systems are powered and secured by a decentralized network of individual computers across the world known as the peer-to-peer network and they both use the blockchain technology.

 

Ethereum was inspired by Bitcoin & the whole blockchain technology, but it essentially “upgraded” upon Bitcoin with the addition of something called “smart contracts” (more on this in a minute). The big idea behind Ethereum is that anybody can use this decentralized network to create and run decentralized applications (called dapps). No permission is needed because third parties (like the Apple App Store) are no longer required.

 

Here’s a lil analogy for ya. Bitcoin is to email, as Ethereum is to the actual web browser. This is because Ethereum’s main “goal” is to enable programs users can interact with and create whereas Bitcoin is for transactions. 

 

What is a smart contract?

 

“Smart Contracts” can run apps, exchange money and other value, and send information. Essentially, they put agreed-upon rules into computer code and then enforce them automatically.

 

Writer Nick Szabo uses the vending machine analogy when describing smart contracts. Think of them this way: If you put in $2 into the vending machine but the bag of Fritos you want are $2.50, no chips for you. If you insert $2.50… yay Fritos! If you put in $2.50 but the Fritos are sold out, you’ll get a refund. 

 

Once these “rules” are agreed upon, they run on their own thanks to computer code, that means no one can change them — which makes sure everything is fair & square for all parties involved. 

 

Ways to use Ethereum

 

It can be very confusing to imagine this whole invisible network of transactions going on, especially when you start to think about how it actually works. I mean, I still don’t really get how the internet is a thing?! It’s just there?

 

Thinking about some of the ways Ethereum can actually be used might help put it all into perspective. 

 

Peer-to-peer Marketplaces

 

You could use Ethereum to create various “marketplaces” where shoppers can pay sellers directly. For example, artists can sell music directly to their fans, instead of using third parties like Apple or Amazon. Music could become cheaper and the artists would still get a larger cut. In fact, this is happening now with sites like audius.co!

 

Peer-to-peer Insurance

 

You could use Ethereum to create insurance policies that are automatically sold and managed on peer-to-peer systems. For example, imagine car insurance that automatically charges you a small amount for ONLY the miles you ACTUALLY drive. Insurance could become cheaper and more customized! 

 

The Sharing Economy

 

You could use Ethereum to turn the things you own but rarely use into income-producing property. Think Airbnb, without the fees. 

 

For example, imagine if others could use your car, your vacuum, or even items such as your couch when you don’t need it – and you automatically get paid. Right now you could use platforms like Airbnb for home sharing, Turo for car sharing, Curb Flip to sell any empty parking spots, Spinlister for bike sharing, etc (if you didn’t know about some of these check them out if you want to make some extra cash!). Anyways, with Ethereum everything could be managed peer-to-peer rather than peer-to-company-to peer. 

 

And you’re probably wondering “what about if something goes wrong and someone steals my car?”. Well, insurance and theft protection could automatically be built into these systems for peace of mind the same way it’s built into third-party services.

 

There are a TON of other ways that people are using Ethereum to build, but these are some of the most exciting ways Ethereum could be used in the future!

lessons in this course

Share on facebook
Share on twitter
Share on linkedin
Share on email

oh, and you can win free stuff just by signing up & referring friends!

join the onomy fam!

Subscribe to our newsletter for free weekly lessons, pro tips, and memes straight to your inbox. We’ll also let you know about 🔥 giveaways and expert events.

By subscribing, you agree to our Privacy Policy and Terms of Use

Already have an account? Log in

lessons