How to use Ethereum?

How to use Ethereum?

The Blockchain Technology was introduced to the world with the introduction of Bitcoin in 2009. The only aim of Bitcoin was to create a decentralized cryptocurrency system. But due to some real-world issues regarding cryptocurrency many forks (changes or updates) were done on Bitcoin and cryptocurrencies like Litecoin, DASH, etc were introduced.

Introduction – how to use ethereum

When issues started to erupt from these cryptocurrencies as well, the experts from all over the world started looking into the underlying Blockchain Technology. The Ethereum Blockchain is another Blockchain which was introduced, for the development and creation of decentralized applications. It even incorporates the functionality of a smart contract. The main basic difference between the decentralized application and a normal application is that, in a decentralized application, no third party has access to your data.

It facilitates the users as well as the organizations on different sides to come together without a centralized intermediary apart from just providing a third-party service. One of the earliest decentralized app or Dapp was BitTorrent. Basically, Ethereum incorporates and generalizes the basic features of the peer to peer blockchain technology and allows the developers to create their personalized applications on it. It can be considered as an inbuilt programming language itself.

Working

All the internal computations, as well as states, are handled by the Ethereum Virtual machine. Practically speaking the Ethereum Virtual Machine contains millions and millions of accounts on the decentralized computers. They have the ability to store the information, execute the code, and even communicate with each other. There are two types of accounts.

1. Externally owned accounts(EOA)

This particular type of account can be accessed by using a private key. A user gains the right to transfer Ether from/to this particular account if he possesses the private key associated with the account.

2. Smart contracts

A contract is an account which runs on its own code without the need for any private key.

In the Ethereum environment, nothing happens on its own. The whole system is triggered by an externally owned account. If the destination of the transaction is another EOA, then the transaction consists of the transfer of Ether. However if the destination is a contract, then a contract is triggered to execute its code and in turn, may call other contracts by communicating with them.

Apart from triggering other contracts a contract can also read or write to its own internal storage and also read the storage of the received message. When a contract calls another subcontract, the completion of tasks happens from the subcontract and then the contract calling it. Hence the whole system once again comes to a standstill until it is again triggered by another transaction.

Contracts are generally used in 4 different manners

1. A contract can be used to store some data which might be useful for another contract or to store some real-world information. For example, a smart contract might hold the currency is required for the other contracts in the system or might hold the information about the members of a particular organization.

2. As forwarding contracts. This particular type of contract is used to simply forward the received information based on the satisfaction of certain conditions. There are also more complex contracts in this domain which have a set of conditions to be met until an action is taken.

3. In the form of an escrow contract. This type of contract basically manages a relationship between two or more individuals or organizations. There can also be open contracts in this domain, for example, a contract can release a reward to a user for achieving some kind of a task.

4. Providing predefined functionalities to other contracts, in other words, serving as a library.

Ether, the prerequisite (how to use ethereum)

Before undertaking any of the above-mentioned transactions a particular user needs to have Ether with him. Ether can be bought easily in cities like New York, Toronto, etc. But in the places where the cryptocurrency is lesser known, a user needs to first buy Bitcoins using the Fiat currency respectively according to his place. Followed by which the Bitcoins can be traded with Ethereum.

The functioning of Ethereum blockchain is different from that of the Bitcoin blockchain in a sense that, users can activate smart contract or a collection of smart contracts basically termed as decentralized apps.

In an Ethereum environment, the user doesn’t need to explicitly write the Assembly language like codes, for smart contracts, but use a simple programming language named Solidity to developed the same.