What Is Ethereum And How Does It Work?

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Ethereum was crowdfunded in the year of 2014 from its fans all over the world, and was developed by a Swiss nonprofit organization, the Ethereum Foundation, in collaboration with some of the greatest minds from around the globe.

Ethereum is one of the newest technologies to join the blockchain movement with the goal to use blockchain to replace internet third parties that store data. Ethereum is a decentralized platform for running smart contracts. Smart contracts are applications that execute exactly as they are set up to by their creators and run with virtually zero possibility of any censorship or third party interference.

What is Ethereum capable of?
Ethereum enables anyone to design and use his or her own cryptocurrency, which can further be used either as a currency or to represent an asset. With a standard API, the contract from these tokens will work with any kind of wallet, contracts or even exchanges. It can also help projects get funding through smart contracts.

What are smart contracts?
With ethereum, every time a program is used, a network of thousands of computers processes it. Contracts written in smart contract-specific programming languages are then compiled into ‘bytecode’, which is then executed by what we call the ‘ethereum virtual machine’ (EVM).

Every node in this network holds a copy of the transaction and smart contract history of the network. Every time a user performs some action, all of the nodes on the network need to come to “agreement” and redefine the networks current state. The nodes transfer every transaction shift from state to state, thus replacing financial authorities such as banks. Ether tokens appear in a wallet, and can be ported to another account. Funds are always somewhere, yet don’t have what you might call a continued relationship.

The Vision:
In short, ethereum wants to be a ‘World Computer’ that would decentralize the existing client-server model. With ethereum, servers and clouds are replaced by thousands of so-called “nodes” run by volunteers from across the globe thus forming a “world computer”. Ethereum aspires to become a super application that would decentralize, democratize and replace financial authorities. Its motivation is to return control into the hands of the actual resource owners without interference from any other authority.

Sources: Coindesk, Forex Crunch

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