What is Ethereum?

Ethereum is an open blockchain platform that anyone can use to create and use distributed applications based on blockchain technology. Like Bitcoin, no one controls or owns Ethereum, an open source project created by many people around the world. Unlike the Bitcoin protocol, however, Ethereum is designed to be flexible and flexible. You can easily create new apps on the Ethereum platform and anyone can easily use them in the Homestead version.

Next Generation Blockchain

Blockchain technology is the technical foundation of Bitcoin. It was first described in the white paper “Bitcoin: Peer-to-Peer Electronic Cash System” released by mysterious author Nakamoto in 2008. 

The blockchain has been used for a wide range of purposes only a few years after the document Blockchain technology became a common term. 

A blockchain is a distributed computing architecture where each network node executes and records the same transactions grouped into blocks. You can only add one block at a time, and each block contains a mathematical test to make sure it is in the same order as the previous block. In this way, the “distributed database” of block chains is consistent throughout the network.

 The interaction of individual users and registers (transactions) is guaranteed with strong encryption technology. The nodes that maintain and validate the network are motivated by written economic incentives in the mathematical implementation of the protocol.

For Bitcoin, the distributed database is considered account balances, and the registers and transactions are bit coin token transfers to facilitate non-credit funding among individuals. But when Bitcoin started attracting more developers and technicians, the new project began using the Bitcoin network for value transfer. Many of them took the form of “alt coins”. In other words, cryptocurrency and separate blockchains have been added to improve the original bit coin protocol. Ethereum inventor Vitalik Buterin suggested that by the end of 2013 there could be many other items in the block chain that could be reprogrammed to perform complex calculations.

In 2014, the founders of Ethereum Vitalik Buterin, Gavin Wood and Jeffrey Wilcke began their next-generation block-chain effort with the intention of implementing an entirely unreliable intelligent contract platform.

Ethereum Virtual Machine

Ethereum is a programmable block chain. Ethereum allows you to create complex tasks that you want instead of providing users with a set of default behaviors such as Bitcoin transactions. It thus serves as a platform for a diverse platform of distributed block-chaining applications, including but not limited to cryptocurrencies.

Ethereum strictly refers to a set of protocols that define a platform for distributed applications. At the heart of all this is the Ethereum Virtual Machine (EVM). EVM is code that can perform arbitrary algorithm complexity. In computer science, Ethereum is “Full Turing”.

 Developers can create applications that run on EVM using familiar programming languages ​​based on existing languages ​​such as JavaScript and Python.Like other block chains, Ethereum also includes P2P network protocols. 

The Ethereum blockchain database is maintained and updated by many nodes connected to the network. Each node in the network runs EVM and executes the same command. For this reason, etterium is sometimes described as a “world computer”.

Large-scale parallel computations on the Ethereum network have not made computing more efficient. In fact, this process makes the computation of Ethereum much slower and more expensive than the traditional “computer”. Instead, each Ethereum node performs EVM to maintain consistency across the block chain. 

Decentralized consent maximizes Ethereum fault tolerance, keeps downtime to zero, and audits without compromising data stored in block chains.The same Ethereum platform is not unique or unknown. Like programming languages, entrepreneurs and developers also decide how to use them. However, some types of applications are more useful for applications than other features of Ethereum. Specifically, Ethereum is ideal for applications that automate direct peer interaction or coordinate group operations across the network. For example, you can coordinate peer-to-market applications or automate complex financial contracts.

 With Bitcoin, people can exchange money without including intermediaries like financial institutions, banks or governments. The effect of Ethereum may be greater. Theoretically, the code that runs on Ethereum allows for automation and can reliably perform financial interactions or complex exchanges. In addition to financial applications, all environments where trust, security, and permanence are important, such as resource registration, voting, management, and object internet, can be significantly impacted by the Ethereum platform.

How does Ethereum work?

Video Player00:0001:28Ethereum integrates many of the features and technologies that are familiar to Bitcoin users and introduces many modifications and innovations.The Bitcoin block chain is purely transactional and the Ethereum base unit is the account. 

The block chain of Ethereum tracks the status of each account, and all state transitions in the Ethereum block chain are the transfer of information between values ​​and accounts. There are two types of accounts.The external asset account (EOA) is controlled by the private key.
Contract accounts are managed by contract code and can only be “activated” by EOA
An important difference for most users is that EOA is verified because an individual user can control the private key and control EOA. Contract accounts are managed by internal code. Since the user is programmed to be controlled by EOA, if the user “sees” it has a specific address and the private key of EOA and EOA is received from the person controlling the control. 

The term “intelligent contract” refers to the code of a contracted account that is executed when a transaction is transferred to that account. You can distribute the code in a block chain to create a new contract.Contract accounts can only be managed under the direction of the EOA. Therefore, for contract accounts, you can not perform local operations such as generating random numbers or making API calls. This can only be done if requested by the EOA. This requires a strict performance guarantee because Ethereum requires the node to agree to the calculation.Just like Bitcoin, you pay for the internet for a small deal. This protects the Ethereum block chain from minor or harmful computational activities such as DDoS attacks or infinite loops. The sender of the transaction must pay for each step of the “program” being activated, including the calculation and storage of the memory. This payment is based on Ethereum’s local value token, ether.These transaction costs are collected from the nodes of the verification network. This “miner” is a node in the Ethereum network that receives, propagates, validates, and executes jobs. Then the miner will perform a number of tasks, including an account of the Ethernet square block chain “state” grouped into so-called “blocks”, then become miners competing for that block and add the next block to become a chain. 

Miners receive ether reward for every successful nugget. This provides an economic incentive for people to devote hardware and electricity to the Ethereum network.Like the Bitcoin network, miners must solve complex math problems that successfully “pull” blocks. This is called “proof of work”.

 A computational problem requires more resources than the solution needs to solve the algorithm, rather than a proof of a solution that is a good candidate. To prevent centralization using proprietary hardware, such as ASICs, as in the Bitcoin network, Ethereum chose a memory problem that was difficult to compute. If the problem requires memory and CPU, the ideal hardware is actually a general-purpose computer. This proves that ASIC is resistant due to the operation of Ethereum. Therefore, distributed security is more distributed than the dominant block chains of specialized hardware such as bit coaches. 

Source: http://cryptoworldlife.com/what-is-ethereum/