What is Ethereum?
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.
This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
The project was bootstrapped via an ether presale in August 2014 by fans all around the world. It is developed by the Ethereum Foundation, a Swiss non-profit, with contributions from great minds across the globe.
What is Ether?
Ether is a digital currency used for operating smart contracts on the Ethereum network. Like Bitcoin, the Ethereum network and Ether tokens are not controlled or issued by any bank or government - instead it is an open network which is managed by its users.
Is Ethereum safe?
Ethereum has been deployed in different phases. Currently the Ethereum project is in the 2nd phase, called “Homestead”. The 4 planned phases for the growth of the Ethereum network are, in order: Frontier, Homestead, Metropolis, and Serenity. Ethereum Homestead clients are working smoothly after being in beta for several months without any major incidents. However, Ethereum is still an experimental technology. Since it allows for programs to run on a virtual machine, it’s still possible that some things may still go wrong, such as poorly written smart contracts that contain bugs.
Why would I use Ethereum?
While Bitcoin allows you take part in a global financial network, using Ethereum you can participate in a global computational network. This is done by means of smart contracts, which are scripts of code that can be deployed in the Ethereum blockchain. Although smart contracts are still a very new technology, they have a wide range of potential applications in many different areas, such as voting, global supply chains, medical records, the financial system, and possibly others that have yet to be discovered.
Is it tied to the value of the dollar?
The value of Ethereum is not tied or pegged to the value of any other currency. Similar to stocks or property, Ethereum's value is determined by buying and selling in the open market. The price of Ethereum changes in real time based on the number of people who want to buy or sell it at a given moment.
Why does it change value?
Ethereum is traded for bitcoin, dollars, euros, yen, and other currencies in real time 24 hours a day. Depending on the demand for buying or selling Ethereum, the price can fluctuate from day to day. This is similar to the manner in which the value of a stock or property can go up or down based on supply and demand. Ethereum value can be volatile compared to currencies such as the US dollar because it is still an emerging technology, with a relatively small pool of liquidity.
Is it similar to a credit card or paypal?
Ethereum operates in a similar way to the Bitcoin network, in that it allows users to send and receive tokens that represent value over an open network. However, the primary aim of Ethereum is not to act as a form of money, but to operate smart contracts.
What is MetaMask?
Now you can create a new Ethereum account to send and receive Ether and also to run dApps. After creating an account, you get a list of 12 words that can be used to retrieve your account when you forget your password. MAKE SURE to save this somewhere SAFE where no one can see.
Now you have your own Ethereum wallet! You can use the main network, which will use real Ethers that cost REAL money, or try some dApps out on test networks such as Ropsten Test Network.
Let’s select Ropsten Test Network and visit https://faucet.metamask.io/. This site will give you free Ether to use on the Ropsten Test Network. After clicking on request 1 free ether, you will find that your account now has 1 ether to use for any dApps! (Again, this is not real ether, think of it as monopoly money.)
Now you can use this to run dApps that exist online. You can search for Ropsten dApps for the latest list of dApps to test. Once you feel pretty comfortable with dApps, you can then start running dApps on the main Ethereum network. You should be VERY VERY careful that you are now spending real Ether. I will try to cover in a separate article some cool dApps that run on both types of network.
I hope you now have a brief understanding of what distributed web, blockchain, Ethereum, and dApps are and how you can play around with them using MetaMask. Feel free to explore the large space of dApps and have fun, but most importantly be safe and responsible!
MetaMask is a bridge that allows you to visit the distributed web of tomorrow in your browser today. It allows you to run Ethereum dApps right in your browser without running a full Ethereum node. MetaMask includes a secure identity vault, providing a user interface to manage your identities on different sites and sign blockchain transactions. You can install the MetaMask add-on in Chrome, Firefox, Opera, and the new Brave browser.
(Credit: S. Choi https://medium.com/@seanschoi/what-is-metamask-really-what-is-it-7bc1bf48c75)