Since the inception of bitcoin by unknown Satoshi nakamoto, there has been a lot of buzz going around the words like blockchain or cryptocurrency. Recently, a new player has entered the market and changed the way blockchain was implemented in real life. Let’s dive deeper on what a ‘blockchain’ is?
In modern world, most of our day-to-day lives is influenced by some third-party elements, for example, you need apps like whatsapp to communicate with your loved ones and hence use their servers for this purpose, you need banks to make a transaction and maintain a record of it, you need telecom services to call someone and many more such examples. When our dependency on these third-party elements increases, the word ‘centralization’ comes into play.’Centralization’ happens when we are bound to use the services offered by an organisation.
Blockchain on the other hand works on a ‘decentralized’ network, decentralized money doesn’t need to be verified by a bank or decentralized storage space sharing system means that you would be able to share your hard drive to someone else, hence eliminating the role of apps like Dropbox, Google Drive etc. When a service is shared on a decentralized network, it’s record of ledger is maintained by all computers ( or nodes) present in that network, also the verification of that particular ledger entry is verified by all the computers present in that network. When a node verifies a ledger, it is awarded with a token or in common saying a ‘coin’. The main elements of blockchain is Peer-to-Peer network, Consensus algorithm, Cryptography and finally the reward. In case you’re wondering what the word blockchain means, when Satoshi Nakamoto invented the bitcoin, he mentioned “…chain of blocks..” referring to each entry in the ledger as a ‘block’ hence the name.
Decentralization helps us to remove the monopoly of capitalist companies from the market and make the consumer more independent and provides him with lots of other option to choose from.Now that we have a brief idea of a blockchain, let’s see finally what is the Ethere
Ethereum is an open source DIY( Do it yourself) blockchain platform. In simple words , Ethereum provides a pre-build platform of a blockchain, the user has to just run their code on it and create their own blockchain system. According to Ethereum’s official website, it is defined as ”…. global, open-source platform for decentralized applications”. Hence, you can run decentralized apps or Dapps on the ethereun platform.In the blockchain part, we learnt that reward is the final step of ant blockchain network, in Ethereum platform this reward is called ‘Ether’. Ether is the second most popular cryptocurrency after bitcoin. Launched in 2013 after the ICO (Initial coin offering) of ethereum, the ether was priced at $0.40 , after ethereum got popular, the value of ether shout up through the roof and is standing at a whooping $377 at the time this article is written.Considering the growing popularity, we can say that ethereum is going to stay in the market for a while now and it’s widely accepted from common people to top tier companies.
Blockchain technology is surely going to shape the shape of modern world economics but it also has some drawbacks. The contract through which the ledger system works in ethereum is very strict and practically immutable unlike other real world contracts which are flexible and take into account various clauses. This strict contract system has created many loopholes in the ethereum platform. Another event took place in 2016 when an organization called DAO ( Decentralized Autonomous organization) was exploited and the hacker drained $50 million worth of ether from the organization.
Such drawbacks questioned the contract policy of Ethereum, on the other side the Ethereum platform has attracted a lot of developers who run their code on the platform and develop their own decentralized enterprises, one such enterprise is Quorum, it is an open source blockchain platform which enables enterprises to leverage Ethereum for their high-value blockchain applications.Incorporating blockchain in a business model has various advantages like reduced cost of trust and coordination between business parties, Improved business network accountability and operational efficiency , Compatibility with public mainnet or permissioned, private networks and much more
Even though being very young, the Ethereum platform has garnered lots of attention around the globe and has provided a very promising insight on the applications of blockchain technology in our daily lives and how it is going to affect future business models, start-up ideas and capitalization. For now, the complete potential of Ethereum is yet to be unlocked and it’s fate still undecided but we can expect a shifting of paradigm the blockchain technology is going to make in the coming years.