If you’ve been anywhere near the Internet lately, you’ve likely heard of Bitcoin’s quickly maturing younger sibling, Ethereum. The platform is self-described as an open-source, public, blockchain-based distributed computing platform featuring smart-contract functionality (phew!) But why is it that innovators in every industry are excited about Ethereum? And what is it that makes Ethereum so different from Bitcoin? Let’s dive in.
A Chip off the Old Blockchain
While Ethereum leverages a blockchain technology that is similar to Bitcoin’s, the capabilities of the two systems are quite divergent. Bitcoin was intended purely as a digital currency, and its software has had severe growing pains scaling that function. Ethereum was built from the ground up with the lofty aspiration of being a decentralized (think cloud-owned by nobody) platform capable of running virtually any application.
Ðapps (Distributed Applications)
In the simplest form, a Ðapp is any application or web site which runs code on Ethereum’s distributed network. The vision is that modern web applications will make calls to Ethereum smart contracts when they need to run a transaction on the blockchain. While that may sound esoteric at the moment, it could lead to a future which disrupts players that have built their strategies around centralized Internet (think Uber, Facebook, Google, etc.). The Ethereum foundation coined the term Ðapp in 2015. They sought to make the concept widely known during Fabian Vogelsteller’s technical explanation at Devcon1, Ethereum’s first major conference. You can see a live list of emerging Ðapps at state of the Ðapps.
ICOs (Initial Coin Offerings)
The Ethereum network runs on its own digital currency, Ether (ETH), but via smart contracts is capable of creating spinoff currencies often referred to as ‘tokens’. These tokens may entitle the holder to benefits such as the right to use the issuing company’s services at a fixed price, or perhaps even a share of profits in the company that issued them.
An exponentially growing number of startups have begun to create and sell their own tokens in what are known as Initial Coin Offerings (ICOs). ICOs are somewhat analogous to the IPOs of the securities world, but without the pesky requirements of regulation, fundamentals, products, business plans or anything really. Literally anyone could attempt to crowdfund an organization through an ICO. Of course, you’ll have to convince people why you’re a good investment. Though this hasn’t been much of a problem for many of the hundreds of ICOs launched year to date. As of June 12, the largest ICO to date raised more than $150 million in Ether.
Ethereum Name Service
In order to send or receive funds on the Ethereum network, you need an Ethereum address. These generally look something like 0xbG8bF84Rfb40285b8dA1FE729B41D95672Cd80A1. Catchy, right?
Enter the Ethereum Name Service (ENS). The ENS has the unique ability to create a user-friendly name for an Ethereum address, such as mycompany.eth. This is not a domain name but rather a friendly name for sending money to an address on the Ethereum network. Bids for domains opened in May, propelling a modern-day gold rush mirroring the domain name rush in the early days of the World Wide Web.
The cryptocurrency space is evolving so head-spinningly fast everything you just read might already be out of date. I hope I at least shed some light on the goings on with Ethereum, at least as of mid-2017, for you. There’s much more to Ethereum than can be covered in a simple blog post, so I encourage you to hit the Comment Section below to let us know if there is more you’d like to know about.