ethereum - super computer

The best way to describe Ethereum is that it is programmable Bitcoin, meaning that developers and software engineers are able to use it to build applications and software instead of just using it as digital money.

👉 Vitalik Buterin created Ethereum in 2013 to let anyone write smart contracts and decentralized applications.

Ethereum Whitepaper⁠

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Ethereum is the upgraded version of Bitcoin, as it can do everything Bitcoin can do and more.

In 2017, Ethereum became mainstream and everyone began to talk about “Smart Contracts”.

So what is a smart contract? 📃

In layman’s terms, a smart contract is code on the blockchain. Just like how blockchain is decentralized, transparent, and immutable, so are smart contracts on the blockchain. Meaning, that code in a smart contract will always run the way it is suppose too. Don’t over think this, Smart Contracts are computer code on the blockchain.

That is why the excitement for Crypto grew with Ethereum. Because it allowed developers to begin building decentralized applications that run on the Ethereum Blockchain. Smart contracts enabled programmable money.

Before, if you wanted to build an application like Venmo or Paypal, you would need to work with a company like Amazon, Google, or Microsoft to run your servers. All developers would have their own servers. Now with Ethereum, all developers can build on the same server, a new super computer!

How does it work?

Software built on Ethereum, is known as a DApp, or decentralized application. That is because once a developer deploys code on a smart contract built on Ethereum, it can run itself forever. There is no need for a central authority like Amazon or Microsoft to run it.

When a user interacts with a DApp they use the native digital currency Ether (ETH), which is the equivalent of Bitcoin. However, using an Ethereum DApp isn’t free, because it takes computer power to execute a transaction. These are known as Gas fees.

Gas fees are the amount a user will pay to interact with an application built on Ethereum.

Let’s check out a cool Ethereum DApp: Uniswap

Uniswap is a Decentralized Exchange on the Ethereum Blockchain. To understand Uniswap, let’s compare it to the New York Stock Exchange.

The New York Stock Exchange is the reason that we are able to buy stocks like Google and Microsoft. If you want to buy or sell a stock, the New York Stock Exchange finds a seller or buyer for you. The New York Stock Exchange makes money by processing all of these trades and providing the liquidity.

Liquidity is the pools of stock and US dollars that are being traded. For the New York Stock Exchange to work, there needs to be a giant pool of a company’s stock and an equivalent amount of US dollars that people are able to switch back and forth between. The New York Stock Exchange controls what is listed on the exchange, when it trades, and who is able to trade it. You cannot make any money off of the New York Stock Exchange’s trades.

Well, what if you could see every trade that happened on the New York Stock Exchange, you could make money by allowing people to trade the stock, you could list any asset you want, AND you could provide stock and US dollars that you own to the liquidity pool? That is Uniswap.

Uniswap can run forever on its own because its code lives on Ethereum Smart Contracts. Anyone can look at the code, and see what is going on behind the scenes. The coolest part, you can now take part in helping run Uniswap and make money from it!

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