What is Ethereum?
However, these applications follow a centralized, client-server type architecture which gives the control of the information of the users in the hands of the company which produces these apps.
On the other hand, in the case of decentralized applications, there is no central authority which owns the information but the information is available and stored with everyone. The first kind of decentralized application we had was BitTorrent which is a peer-to-peer file sharing protocol, used to distribute data and electronic files over the Internet.
With the advent of blockchain technology in 2009, we had a new kind of technological revolution. However, until 2015, it was used merely as a way to power the first cryptocurrency called Bitcoin. In 2015, with the launch of Ethereum, we had a blockchain which facilitated the development of decentralized applications through a programming language called Solidity.
This can lead to a revolution in the finance sector as well as help in promoting peer-to-peer commerce along with distributed governance. By packaging this technology into an Open Client, Ethereum makes it easy for anyone to use, thus, providing a robust tool for human collaboration.
So as you can see Ethereum is not a cryptocurrency like Bitcoin, rather it functions more like a software to enable people to build on top of it.
Everything built on top of Ethereum is decentralized and the Ethereum blockchain itself is run by ‘nodes’ which are nothing but participants in the Ethereum network that maintain the network security and stability and get rewards for the same.
“On traditional server architectures, every application has to set up its own servers that run their own code in isolated silos, making sharing of data hard. If a single app is compromised or goes offline, many users and other apps are affected.
On a blockchain, anyone can set up a node that replicates the necessary data for all nodes to reach an agreement and be compensated by users and app developers. This allows user data to remain private and apps to be decentralized like the Internet was supposed to work.” – Ethereum.org
How are these applications built on Ethereum? It does it through a technology called Smart Contracts.
Smart contracts are self-executing contracts written on the Ethereum Blockchain. These smart contracts are written using Ethereum’s programming language, Solidity and can function without any third-party interference, fraud, censorship or downtime.
By providing, all these functionalities, it has established itself as the “World Computer”, which provides a secure architectural backbone for e-commerce, IoT, Governance, finance along with many other industrial applications.