Ethereum

Ethereum, Ether, Smart contracts, what are these?

This is not the only reason for banks to start using ripple platform, another big advantage is unlike BTC which is taking an hour to clear the transactions and ETH taking two minutes, XRP takes only 4 seconds

A blockchain is a type of public database where data and state are stored in sequential manner called blocks and these large databases are hosted on big servers with greater computational power and storage capabilities for many users to access the information simultaneously. The data that is carried in the block cant be changed without changing all subsequent blocks that needs consensus of the entire network.

Ethereum uses the proof of work consensus mechanism, which means anyone who wants to add a block to the chain must solve a complex puzzle which requires a lot of computing power. When the puzzle is solved and node has used its computational resources by trial and error , a block is added to the chain, this process is called mining and the miner is awarded with ETH, the new blocks added are broadcasted to the nodes in the network where these nodes validate the transaction and update the state of blockchain.

In Ethereum, there is a central single canonical computer called EVM or Ethereum Virtual Machine and its state must be agreed by everyone on the network. Anyone who participated in the network must keep a copy of the states of this computer. Anyone on the network can broadcast the request to perform arbitrary computation ( called transactions), everyone on the network verify, validate the request and execute the computation which causes the state change in EVM and is communicated to all the nodes in the network. These transactions and present state of EVM is stored in blockchain.

These transactions so verified, validated and executed are stored in a chain of cryptographic blocks which cant be altered or tampered later. These transactions are signed and executed with proper permissions, which means only the sender can send digital assets using the sender’s credentials (which are unique)

Ether:

Ether is a cryptocurrency built using the Ethereum blockchain and allows the existence of a market for computation. Anyone who initiates the transactions, offers some ether to the network as an award to verify, validate, execute and compute the transaction and broadcast it to the network. The amount of Ether paid depends on the length of the computation. As the amount is directly dependent on the length of computation so anyone who is intentionally trying to clog the network by executing the infinite loop or resource intensive scripts are prevented as the charges increases with the amount of computational resources needed, or, we can say, to become a cryptocurrency that could be traded, Ether powers the Ethereum network by paying for transaction fees and computational services. In this way, Ether is opening the market for a more intelligent financial platform.

Smart Contracts:

In real time, participants are not writing codes to solve the complex puzzle every time, rather the application developers upload the reusable snippets of code in the EVM storage then users make requests for the execution of these code snippets with varying parameters. The programs that are uploaded and are executed by nodes on the network are called Smart Contracts.

In easy language, we can say smart contracts are nothing but a script that has some predefined parameters, its performs some actions if certain conditions are satisfied. Like, a simple smart contract could create and assign ownership of a digital asset if the caller sends ether to a specific recipient.

Any developer can create a smart contract and make it public to the network, using the blockchain as its data layer, for a fee paid to the network. Any user can then call the smart contract to execute its code, again for a fee paid to the network. Therefore with smart contracts, developers build and deploy the complex problems, eg. apps and services.

How much is it worth?

Like all other digital currencies, market value of 1 coin is defined by supply and demand, more the demand, means more people are buying that, more is the value, at this moment, ether value is $2488 USD.

As this platform is growing and so are the currencies that are built over Ethereum protocol, it is changing the way day to day business are working and also day to day transactions. The more quickly we get better understanding of Ether, the more will be the acceptance and more secure and fast the future transaction be.