What is Ethereum?
Before getting to know Ethereum more in detail, make sure that you are already familiar with /what a blockchain is/.
In simple terms, Ethereum is a blockchain based platform designed to run "smart contracts." Smart contracts are a form of immutable computer code, that can't be altered once it is deployed on the network. The role of a smart contract is to let you exchange money, services, or anything of value in a transparent way and without the need of an intermediary or a trusted party. Its applications vary and can be used in a variety of sectors, ranging from finance, banking, insurance and the tech industry. Here is an example of a smart contract application:
- Banks transfer money between themselves on a daily basis. However, the cost of transferring money from one institution to another, especially if they are not in the same country may take hours or even days. In addition to that, this process is also very costly for banks. Using a blockchain would render the process to be instantaneous and very cost efficient, while Ethereum smart contracts may automate the process and only trigger a transaction when a particular set of conditions are met.
This (and many other applications) are probably the reason why there are so many banks involved in the Enterprise Ethereum Alliance.
What's the use of the Ethereum cryptocurrency 'ether'?
Ethereum uses its own cryptocurrency called as "ether". Ether is used as fuel, or 'gas' on the Ethereum network. It is what makes running smart contracts and transactions possible as it is the value that 'miners' are paid with. Gas also has other functions such as preventing DoS attacks and making malicious attackers pay more for executing their attacks. In other words, gas is the fraction of ether you pay for making your transactions go through the system.