Ethereum is a technology for building apps and organizations, holding assets, transacting and communicating without being controlled by a central authority. There is no need to hand over all your personal details to use Ethereum - you keep control of your own data and what is being shared. Ethereum has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network.
- Launched in 2015, Ethereum builds on Bitcoin's innovation, with some big differences
- Both let you use digital money without payment providers or banks. But Ethereum is programmable, so you can also build and deploy decentralized applications on its network.
- Ethereum being programmable means that you can build apps that use the blockchain to store data or control what your app can do. This results in a general purpose blockchain that can be programmed to do anything. As there is no limit to what Ethereum can do, it allows for great innovation to happen on the Ethereum network.
- While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you.
Ethereum is not controlled by any one entity. It exists solely through the decentralized participation and cooperation of the community. Ethereum makes use of nodes (a computer with a copy of the Ethereum blockchain data) run by volunteers to replace individual server and cloud systems owned by major internet providers and services. These distributed nodes, run by individuals and businesses all over the world, provide resiliency to the Ethereum network infrastructure. It is therefore much less vulnerable to hacks or shutdowns. Since its launch in 2015, Ethereum has never suffered downtime. There are thousands of individual nodes running Ethereum network. This makes Ethereum one of the most decentralized cryptocurrencies out there, second only to bitcoin.
Smart contracts are simply computer programs living on the Ethereum blockchain. They only execute when triggered by a transaction from a user (or another contract). They make Ethereum very flexible in what it can do and distinguish it from other cryptocurrencies. These programs are what we now call decentralized apps, or dapps.
Have you ever used a product that changed its terms of service? Or removed a feature you found useful? Once a smart contract is published to Ethereum, it will be online and operational for as long as Ethereum exists. Not even the author can take it down. Since smart contracts are automated, they do not discriminate against any user and are always ready to use.
Popular examples of smart contracts are lending apps, decentralized trading exchanges, insurance, crowdfunding apps - basically anything you can think of.
Introduction to Web3
Centralization has helped onboard billions of people to the World Wide Web and created the stable, robust infrastructure on which it lives. At the same time, a handful of centralized entities have a stronghold on large swathes of the World Wide Web, unilaterally deciding what should and should not be allowed.
Web3 is the answer to this dilemma. Instead of a Web monopolized by large technology companies, Web3 embraces decentralization and is being built, operated, and owned by its users. Web3 puts power in the hands of individuals rather than corporations. Before we talk about Web3, let's explore how we got here.
The early Web
Most people think of the Web as a continuous pillar of modern life—it was invented and has just existed since. However, the Web most of us know today is quite different from originally imagined. To understand this better, it's helpful to break the Web's short history into loose periods—Web 1.0 and Web 2.0. Web 1.0: Read-Only (1990-2004)
In 1989, at CERN, Geneva, Tim Berners-Lee was busy developing the protocols that would become the World Wide Web. His idea? To create open, decentralized protocols that allowed information-sharing from anywhere on Earth.
The first inception of Berners-Lee's creation, now known as 'Web 1.0', occurred roughly between 1990 to 2004. Web 1.0 was mainly static websites owned by companies, and there was close to zero interaction between users - individuals seldom produced content - leading to it being known as the read-only web.
Why is Web3 important?
- Although Web3's killer features aren't isolated and don't fit into neat categories, for simplicity we've tried to separate them to make them easier to understand. Ownership
- Web3 gives you ownership of your digital assets in an unprecedented way. For example, say you're playing a web2 game. If you purchase an in-game item, it is tied directly to your account. If the game creators delete your account, you will lose these items. Or, if you stop playing the game, you lose the value you invested into your in-game items.
- Web3 allows for direct ownership through non-fungible tokens (NFTs). No one, not even the game's creators, has the power to take away your ownership. And, if you stop playing, you can sell or trade your in-game items on open markets and recoup their value.