Updated: Mar 2, 2022
Some people believe that the creation of Bitcoin and blockchain was one of the biggest technological development of the past few years; the blockchain itself has opened a spectrum of possibilities. This peer-to-peer network is still in its early stages and every year more start-ups are developing software that can change the way things work nowadays.
Bitcoin introduced to the world a decentralized network in which the third-party entities are eliminated. Moreover, Vitalik Buterin founded a platform named Ethereum, launched in 2015. If cryptocurrency has come to revolutionize the financial system, Ethereum has come to revolutionize everything; yes, pretty much everything.
Here’s how? (TechCrunch interview: Vitalik Buterin)
“Ethereum is a decentralized platform that runs smart contracts; applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. These apps run on a custom-built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.”
Basically, this blockchain is based on a general program language. It has enough flexibility for the programmer to create whatever is imagined, using coding margins. In other words, Ethereum provides its users with a computer program that controls digital assets by creating smart contracts.
So why are smart contracts revolutionary?
“The intent of Ethereum is to create an alternative protocol for building decentralized applications. It will do this by providing a different set of trade-offs that we believe will be very useful for a large class of decentralized applications. These will have a particular emphasis on situations where rapid development time, security for small and rarely used applications, and the ability of different applications to efficiently interact are important. Ethereum does this by building what is essentially the ultimate abstract foundational layer: a blockchain with a built-in Turing-complete programming language. The latter allows anyone to write smart contracts and decentralized applications in which they can create their own arbitrary rules for ownership, transaction formats, and state transition functions,” as stated in the Ethereum whitepaper.
With a Smart Contract, you can exchange money, property, shares, or basically anything that you consider valuable. All of this is done in the transparency that a blockchain provides.
Once you agree to a smart contract, you need to pay a fee to be able to receive your purchase. In the “real world,” things like purchasing a car, a house, or requesting a loan from a bank can take days or even months in some cases. With platforms like Ethereum, this can be done in a faster and more efficient way, thus, getting rid of the tedious bureaucracy that many entities have.
Many agree that the most exciting part of smart contracts is being completely autonomous. You can make an agreement with more than one person and figure out your own terms without the need of a lawyer or a third party doing that for you; this saves you time and money. It also provides you with one of the most secure networks created (blockchain), where all your documentation is backed up by everyone else in the system.
Although this all sounds great and I do believe blockchain may be the future, I must say that this is still all in its early stages, just like cryptocurrency itself. Researching on Ethereum was not easy, especially because this platform does not only provide users with the tools to create smart contacts, but it also offers many other decentralized applications. However, most of the information out there is explained as if it were for programmers, and this is fine for now, but at some point, this needs to be user-friendly for everyone. If the main idea behind cryptocurrency and Ethereum, with smart contracts, is to decentralize how our current system works, eventually, it needs to adapt to not only programmers but the needs and understanding of everyone.
Hope you enjoyed it! Feel free to comment if you like.