Decentralized technologies have made a huge progress in the last decade. The first major decentralized application to go viral was BitTorrent in early 2000. It was a file sharing network that allowed its users to share files across the globe. Five years later, Satoshi Nakamoto came out with the idea of BlockChain (a distributed Database) and used it to built the Decentralized Currency, BitCoin. BitCoin was a huge success because it allowed users to send and receive payments to anyone in the world without the approval or involvement of the financial institutions.
If we dissect BitCoin, it is nothing more than a combination of two ideas: a distributed consensus and a decentralized currency. The consensus part comes from the BlockChain technology and is used to verify “a piece of information” through the consensus of a large population (large number of computers validating), and the currency part comes from the BitCoin as an economic incentive for the work performed to “verify” that information. After the success of BitCoin, the engineers began to wonder, why not use the distributed consensus model for other real-world issues? Thus came along Ethereum and the idea of a platform for Decentralized Applications, or DAPPS, was born.
Ethereum is a system that provides a platform to programmers to develop Decentralized Applications. It can be used to develop decentralized finance applications, peer-to-peer messaging, heavy CPU consuming applications, governmental voting systems, contracts and many more.
Ethereum is a model based on BlockChain Technology. BlockChain refers to the chain of data which is stored and copied on many servers or nodes across the globe. The replication of data across many computers is known as decentralization. In other words, there is no single source of truth but many sources which can be used to confirm the integrity of a given piece of information. The two immediate benefits of decentralization are the Data Verification and Data Availability.
In Ethereum’s decentralized environment, if you hack a single server and change its contents, the others servers across the globe will still carry the true copy of the data. Thus the information integrity is retained and cannot be modified.
I think of Ethereum like a Skynet in the movie Terminator because it cannot be shut down. Since the data is saved on many different computers, bringing down a single server or PC will not hinder the data availability. In other words, that is similar to saying our data is available 100% of the time as there is no single point of failure.
Real-life uses of Ethereum
One of the important functions offered by Ethereum are the smart contracts. Smart contracts have many useful applications in daily-life business. Some of them are as follows:
The US Government has generally stayed away from online voting because of security reasons. If they store voting data on a federal server and that gets hacked, the election results would be declared invalid. This issue could be solved by the Ethereum’s BlockChain.
A smart contract can be created which would accept citizen’s votes along with their social security numbers and would validate that a particular individual has not voted yet before counting in their selection. Because the voting contract would be running on the BlockChain, in order to hack it, the hackers would need more computing power than the whole BlockChain nodes combined.
True Artificial Intelligence
The smart contracts can be used to truly automate many of our daily chores. Take Uber’s ride sharing program for example. It requires humans to manage the system. A smart contract, combined with Google’s self-driving cars would take the human variable completely out of the equation and automate the whole process. It would allow cars to be independent entities, paying for their own repairs, getting gas, parking themselves and picking and dropping passengers.
Traditionally we use humans or some kind of source of truth to verify the ownership of an object. The BlockChain could automate that and truly link objects to their owners. For example: Only we can rent our house or apartment using AirBnB because AirBnB believes we own that real-estate. In Ethereum’s world, we wouldn’t need an entity like AirBnB to verify we are the owners since BlockChain would take that chore away. Our Ethereum smart contract would allow us to “transfer the ownership” of the real-estate for x amount of time and getting the payment for that time automatically. Thus taking the middle man completely out of the equation.
When Google acquired WhatsApp for approximately $19 billion, it was not paying that much money for the engineers who built the chat app. Instead, it was paying for value of the data of 500 million users who used WhatsApp. So, even though WhatsApp received $19 billion, the average user saw no share of that money. In Ethereum’s world, you would truly own your data and for others to be able to use it, they will have to pay you directly. This is the difference between a single entity benefiting from all of its users’ data versus users owning their own data.
Should You Invest in Ether?
Asking whether you should buy Ether for the sake of investment or capital growth is not the right question. If you want to invest in Ether, it should be because you believe in this technology and believe that this project will succeed.
Unlike BitCoin, Ether is not designed to function as a global digital currency. Instead, it is meant to pay for specific actions on the Ethereum network, with users receiving it for using their computing power to validate transactions and for contributing to its development. Simply put, Ethereum’s value will grow in proportion to its BlockChain being used to create smart contracts and Decentralized Apps (or DAPPS); and Ether’s value is tied to the success of Ethereum.
If you must buy Ether, you can purchase it via exchanges like CoinBase. Essentially, Ether’s market is currently supported by many of the same exchanges that has built up around the BitCoin network.
Personally, I hold a small amount of Ether because I believe in the many awesome uses of Ethereum. I consider Ether to be a high-risk, high-reward long-term investment on technology that I believe will play a major role in many industries in the future. At the same time, I am fully comfortable with losing my entire invested amount. So invest wisely!
You can use my referral link https://www.coinbase.com/join/bigkitty (if you use this to join CoinBase, you will get $10 worth of BitCoins and I will get $10 worth of BitCoins)