To an outsider, understanding Ethereum might seem like a complex technical undertaking. But as a former outsider, it’s really not! This post serves to simply define key terms and concepts in the Ethereum network, so you’re equipped for schmoozing at the next conference afterparty that has the word ‘blockchain’ in its title.
What is Ethereum?
- The Ethereum blockchain is a public database that lets developers build and deploy decentralized applications. Think of it as a tool to create any decentralized online service.
- Bitcoin is a way to store and move digital value (e.g. “digital gold”), while Ethereum extends digital value to be programmable.
- Using advanced computation, Ethereum records its data in “smart contracts,” or computer code that can facilitate the exchange of anything of value.
The main benefits of Ethereum
- The Ethereum blockchain is a trusted source of information that you can be positive no one has tampered with
- People are rewarded in Ether (ETH) for validating transactions fairly AKA mining new blocks for the chain
- Unlike Bitcoin, Ethereum supports Turing completeness, so anyone can write any program to be executed on it. This makes it a good foundation for the aforementioned decentralized applications, or dApps.
What is Ether/ETH?
- Ether is the native token of the Ethereum blockchain, known shorthand as ETH. It is the required medium of exchange for paying fees to complete protocol-level computations on the Ethereum network.
- Ether (ETH) is the fuel for the blockchain. You need ETH to be able to update smart contracts and participate in the sending and buying of tokens. Note: People use Ether and ETH interchangeably.
How do I send transactions in Ethereum?
- Depending on which wallet provider you are using, it can be as simple as copy and pasting in the recipient's wallet address, then typing out the amount of Ether you want to send.
- Optionally, you can add a gas price to your transaction to prioritize your transaction over others.
How Gas works on Ethereum
- Gas is the fee affixed to an Ethereum transaction that, depending on the limits the sender sets, can make a transaction happen faster or slower than others
- Like electricity, the price of Gas depends on demand at a given time
We’ll be writing more posts that serve as simple introductions to the core concepts in the Ethereum ecosystem. Stayed tuned.
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