For Absolute Beginners: Ethereum
This blog introduces Ethereum to an absolute beginner who has no background in blockchain, crypto, or technology.
This blog is part of my Web 3.0 For Absolute Beginners(FAB) series that aims to enable a layman to understand Web3.0 concepts.
When I initially started with Web3, I had difficulty understanding what Ethereum is and why it is such a big deal. Once I went deeper, I finally realized its importance both from a technical and societal standpoint. I always felt the need for a post that could convey the importance of "Ethereum" to an absolute beginner with no background in Technology, Crypto, Blockchain, or Web3. I have finally decided to write one myself! 💪 💪
Before I get started on Ethereum, I'd strongly recommend that you check out my previous blog on Bitcoin to get a good understanding of Monetary Systems and Blockchain in general.
Ethereum builds its foundation on two core concepts Cloud Computing and Blockchain.
Cloud Computing
We interact with several web applications on a day-to-day basis. This blog that you are currently reading is also a part of a web application called "Medium." While the content of this blog is displayed on your screen, it is not stored on your personal laptop/computer. The blog's content lives on a remote computer(i.e., server) that hosts this blog. A complex application such as Medium having millions of daily active users, cannot be supported on a single remote computer. To solve this problem, it is simultaneously hosted on a group of computers. This group of computers is known as a cloud as they can be distributed across the globe.
Cloud computing is known as using remote servers on clouds to host applications. Corporates like Amazon(AWS), Google(GCP), and Microsoft(Azure) provide such cloud services.
Blockchain
Blockchain can be thought of as a network of computers around the globe that simultaneously run the same program and also store the same data. This ensures that if some of the computers(i.e., nodes) are tampered with, others can correct them.
The only way to corrupt a blockchain is to simultaneously change the code/data on 51% of the participating nodes. This is known as a 51% attack.
How do these relate to Ethereum?
Ethereum can be thought of as a marriage between Cloud Computing and Blockchain. Here the computers in the cloud are replaced by nodes of the Blockchain. So essentially, Blockchain becomes the foundational infrastructure for the cloud. This also enables Ethereum to be a publicly owned cloud making it very difficult for one single entity to orchestrate a 51% attack. Due to this decentralized nature of a Blockchain, applications hosted on Ethereum are known as dApps(Decentralized Applications). These fundamentally differ from web apps hosted on corporate-owned centralized platforms like AWS, GCP, and Azure.
Smart Contracts
The code that runs on Ethereum to host a dApp is known as a smart contract. These smart contracts run in isolation on the Ethereum blockchain network. This means they cannot interact with the ordinary internet from within the Ethereum network. But, dApps within the Ethereum network can interact with each other. This is why Ethereum is also sometimes thought of as a separate internet in itself that is decentralized, transparent, and publically owned.
Note: 1 ether = 1,000,000,000,000,000,000 wei (10^18)
Compute costs for hosting smart contracts are paid using "Ether" (or "Wei"). This is the defacto currency of the Ethereum Network. "Ether" is very similar to "Bitcoin." The only difference is that "Ether" can also be used to pay the compute fees for hosting dApps. These compute fees are also known as "Gas Costs" in Web3.0 terminology.
That's it, folks! Not so complex, huh? You can now finally understand some of the conversations that your techie friends have around the decentralized internet, or "web3.0," as they call it. 🎉 🥳
We will tackle various aspects of web3.0, like dApps, DAOs(Decentralized Autonomous Organizations), Oracles, etc., in greater detail in my upcoming blogs.
Stay Tuned!!
