Ethereum is an enormous decentralized platform. It was made by the Ethereum Foundation, which is a club formed by a group of innovative people. Vitalik Buterin takes the limelight at the Ethereum Foundation. He was impressed by the cryptocurrency Bitcoin and the underlying technology behind it. That is why he came up with a platform for decentralized applications.
Ethereum
It was funded by crowdfunding in 2014 by people from various countries. It is a non-profit platform. Basically, Vitalik Buterin has made a counterpart from the bitcoin network. Ethereum has its own blockchain too. Interestingly, the crowdfunding was done through bitcoins! Ethereum began in July 2015. It was put forward as a platform for programmable transactions and Decentralized Autonomous Organizations. Programmable transactions are also referred to as “smart contracts”.
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Smart Contracts
Basically, smart contracts are digital protocols which control and manage contracts and, if needed, adjust them if required, in connection with superfluous clauses. All actions to be carried out, such as monthly payments for rental contracts, must be recorded. Smart contracts are developed in a way that they can exactly adapt to the current situation, for a particular landlord and tenant.
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Smart contracts can function independently, so transaction costs are minimized. People who enter into an agreement do not require any human intermediary to sign off a deal. This type of agreements and deals may sound unconventional but the expectations attached to these type of transactions are high. Everyone can read all the contracts in the blockchain.
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Ether
Ether is the electronic payment unit in Ethereum. The transactions are encrypted using a cryptocurrency, just like bitcoin. So, how can a small organization compete with a larger one? Disruptive technologies like Ethereum can cause a breakthrough. Larger organizations usually focus on sustainable innovation. This is done by improving products and services to entice customers who are willing to pay more for quality. Meanwhile, they sometimes ignore their regular customers. These are the so-called ordinary customers who just want simple products at an affordable price.
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Disruptive Technology
Small businesses have an opportunity here. The bigwigs remain focused on profitable customers and go too far in their pursuit. The introduce more, colors, functions, flavors and other things. However, a lot of people do not want to pay for these extra things. The small disruptive companies can seize this opportunity to adapt their products to the demands of the large group of customers. By the time larger companies realize this, they have already lost a big chunk of their market share to smaller companies.
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Large companies can stop this by launching their disruptive innovations. They need to treat these innovations as a separate part of the company, along with a different business model. They will have to adjust their growth expectations too. Disruptive innovations like the Ethereum blockchain creates new markets in addition to reshaping existing markets. In today’s rapidly changing world. disruption has become a necessity.
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Trust is a very important pillar of the economy. Without trust, the economy will be a mess. This was witnessed in 2008 and years beyond that. In a decentralized system, it is nearly impossible to do fraud. This boosts confidence.
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Openness and transparency can restore confidence in the economy. Decentralized databases provide a solution here. In western societies, some people wonder if democracy really is the best way to govern a society. For people born in a democracy, this system seems natural to them. Over the last thirty years, it has been observed that fewer people go to vote and the confidence in democracy has reduced.
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The people who are generally not inclined to vote are usually the ones who have something at stake. For instance, disadvantaged people, minorities, and the disabled. The economic crises have boosted the confidence of people in democratic and political institutions. A survey done in 2012 by the European Commission showed that 89% of the European population believes that there is a growing gap between the opinions of lawmakers and feelings and judgment of people.
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A lot of people now understand that they may change governments but changing policies is not that easy. In Europe, people have never been freer but the confidence in politics has gone down. People have more rights, they can travel more, and they have more access to information but they don’t trust the government. What went wrong? This could be attributed to the many revolutions that took place in the recent decades. For instance, the social and cultural revolution at the end of the 60s. In the late 1980s, communism and the cold war ended in Eastern Europe. This was also the beginning of globalization. When the internet arrived in the nineties, people got more freedom and power. The way we communicate now is not something we ever imagined. The social and cultural revolutions have eradicated a common goal. That is why people are not so interested in politics now. They are more into matters which ensure they are better off.
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The commercialization that took place in the 1980s increased inequality between people. How ironic is it that the political campaigns in the 1970s always talked about fighting inequality? Nowadays, as societies become more democratic, the inequality between people also increases. So, in the past democracy was associated with a fight against inequality but now there are contradictions. Today’s society is very polarized. Some people compare today’s time to the thirties of the last century! So, the people are no longer buying it and some have created their own political ghettos on the internet. This enables people to stay connected to political communities.
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The Internet has made it easier for people to work together. However, the internet can also influence politics. A lot of research is being done into the brain and decision making. Neuroscientists are developing technologies which will make it possible in the future to manipulate the emotions of people. This means it will be easy to influence people during elections. Whereas in the past the revolutions were political, now there are revolutions in the field of social media and digitization. The Twitter revolutions and the Facebook resolutions are the examples of this.
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By increasing the transparency of politics, democratic confidence can be restored. The combination new technologies, active citizens, and transparent legislation will increase confidence. Blockchain and Ethereum can really make a difference. Blockchain technology makes it harder for governments to steal and lie. Transparency is not just about restoring confidence in politics, but also about managing the mistrust which prevails.
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The upcoming and new technologies will allow people to trace all the opinions and statements which have been made by a politician. So, it will make it difficult for politicians to lie. Consistency will become important. However, more openness may make governments apply selective transparency. They will only share information which serves the public interest. Currently, voting is either done via a pencil or a computer. Ethereum blockchain will make it easier to count all votes. It is an open, distributed, and decentralized ledger. This will make electoral fraud impossible. The data in a blockchain is visible to all in real time. This will be a huge change as it was impossible in the past to have democracy without the involvement of a central party.
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An open source system like Ethereum creates a system which is completely free of all corrupt factors, within the democratic process. With the Ethereum blockchain, it will be easier for people to trust others. The blockchain network makes decision making easier. A smart contract is drawn up between two parties. Ethereum can open up new services which were not thought of before.
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The Ethereum blockchain is a network which democratizes transactions just like the internet democratized information. The main difference between information and transaction is that a transaction – unlike information – also carries trust. And trust is very important. Ethereum makes it possible to develop new institutes by means of coding and software. Ethereum will redefine the nature of the legislation.
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Right now, we have a central identity. Passports are issued by governments to identify us. Our identity is also linked to the passwords we use online. We have different passwords for different online services. Our identity, our data, and other sensitive personal information are stored and distributed at a number of very large organizations.The best-known ones are Facebook and Google.
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Ethereum provides a new way of personal autonomy and online authentication. In some countries of the world, it is imperative to stay anonymous online, especially if you are involved in political activism. Some people are blacklisted after making certain statements online. Instead of leaving a sensitive information or password on a server of a company we do not know, we should store this information on our own devices. These are the devices that we frequently use and are close to us like smartphone or computer. Ethereum will make this possible.
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Internet Of Things
Ethereum can also be linked to all kinds of devices. It can be connected to washing machines, coffee makers, refrigerators, self-driving cars etc. Ethereum develops applications which make the blockchain understandable and accessible to laymen. By 2020, it is predicted that around 50 billion devices will be online. These devices will broadcast information, and get and execute instructions. Before most of the people embraced the internet of things, the costs could increase. These are the costs which should be incurred to make sure that all processes run in a safe and reliable manner. Ethereum blockchain provides the perfect platform for the Internet of Things. The technology could be used to locate decentralized smart devices, perform transactions and coordinate equipment. The internet of things with the blockchain offers a flexible digital infrastructure. The costs can also go down this way.
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Summary
- Ethereum is not a cryptocurrency or digital money like Bitcoin or litecoins. It is basically a network which is like the internet technology and data structure of Bitcoin: the Blockchain.
- The blockchain is an open, distributed ledger of all transactions.
- Ether is the Ethereum cryptocurrency.
- Ethereum is more of a crypto equity. It must be used if you want to use applications and smart contracts within Ethereum.
- An Ether wallet is needed to send and receive ethers.
- Ethereum works like a supercomputer for programming applications based on smart contracts.
- The smart contracts are basically program contracts which are fixed in the blockchain. They are executed on the basis of pre-programmed transactions.
