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What Ethereum Is – Think Bitcoin and Then Some

It may take a while for the concept of what blockchain means to sink in when you consider what it does, what its applications are, what its strengths are and how it differs from modern technology.

If you did the homework from my last newsletter and blog post, you should have read the Satoshi Nakamoto Whitepaper about Bitcoin, where you would have begun to learn about the topics of double spending, “nonces” (funny word), and what proof of work consensus is all about. The Bitcoin Whitepaper is only about 9 pages – I think I read it in its entirety on a subway ride in Seoul. Not to say I understood everything the first time, nor should have you.

 

 

If you look at the title of Satoshi’s White Paper, you’ll see it says “A Peer-to-Peer Electronic Payment System.” Bitcoin operates on top of a blockchain and through some very sophisticated software and cryptography, enables revolutionary transactions to happen between humans electronically without the possibility of double spending. Amazing, right?

Well, imagine you could do peer-to-peer payments with that blockchain and with that proof of work consensus, but also do a lot more? Say, run computer programs?

Yes, Ethereum actually is a fully distributed, decentralized, node driven network of computers that operates on a blockchain and in addition to that, it can process files of code called “smart contracts.” Smart contracts can do a lot of different things, but think of them largely as contractual agreements between two or more parties on the blockchain that will execute and pay out money or do other cool computational work if conditions within the computer code are met.

Yeah, I know that’s sounding a bit out of this world. I get it – this stuff is hard. However just think about it this way – pretty much all of the computer systems you use are operated on or through centralized databases. These databases are owned by someone – who knows who? Your data is on there and sometimes it’s not aware to you where your data is and how much of that data you can access. Our world is full of intermediaries – lawyers, accountants, police, government, employers. So, imagine in the future – take as many intermediaries out of the equation as possible and being able to interact in many facets of like that we take for granted and believe are out of our control – all though these smart contracts.

You can even do ICO’s. But I’ll save that for later.

I’m going to let this sink in for a bit before we move into too much more detail about that. Ethereum is as amazing technologically as it is phillosophically in my opinion. Don’t ever ask me to talk about it with you unless you’ve got some time to spare while I talk your ear off.

To learn more about Ethereum, visit the Ethereum Foundation website, read the white paper and check out this video.

Newsletter, Opinion

Why Sign Up For Another Newsletter? Well, Here’s Why:

I first want to thank everyone who has reached out to me in the past year, asking me for advice and more information about cryptocurrencies and blockchain. I started off with zero knowledge just a few years ago in 2013 and remained relatively ignorant of the space and the power behind this movement only up until 2015. As I humbled myself and became a student of the truly great minds behind the successful (and some unsuccessful) projects in the space, I have been fortunate to learn from some of the smartest people in the industry and broaden my knowledge exponentially.

It’s important to remember a few things as you read this and take whatever I have to say, think or write as truth or not.

First, I am not a computer programmer. I’ve never been paid to write a line of code in my life outside of a handful of WordPress and basic HTML/Bootstrap websites I created to make extra money as a freelancer. So, when I opine on the strength of a particular cryptocurrency, platform or industry application, realize I am speaking from a lower level of expertise than some of the people I look up to in this space. Wherever possible, I will point you, the reader, to the best primary sources of information directly. I work in this space and know quite a bit about the business side of things nowadays, but I am still learning along with everyone else.

Second, I own a large amount of several different cryptocurrencies. I will disclose this whenever possible to ensure that I am, and will continue to be biased towards positions I have a stake in. This isn’t to say I am pro-Ethereum and anti-Bitcoin, or anything else – however I just want to be clear that even folks such as myself who proclaim to be “blockchain agnostic” still can have conscious or unconscious biases for or against specific technologies. Look deep within yourself – you’ll see your own consumer and ideological biases as well if you’re honest. In addition to that, I will and I must maintain confidentiality with the variety of employers, business partners and associates I’ve worked with over the years. So everything you read from me is publicly available information that you could access yourself without me – I’ll never share my confidential information.

Third, this content I create is not, has never been and never will be financial advice. If you buy any of the cryptocurrencies I cover or invest in any of the ICO’s I mention or anything else for that matter – I take no responsibility and assume no risk on your behalf. This content is purely for educational purposes about the space and the players in it and isn’t meant as financial advice in any way. This is computer money. There’s always the chance all your investments could go to zero. Never invest more than you can afford to lose.

Lastly, do your own research. Following my advice without knowing, at least on a superficial level, what the technology you’re investing in does is a bad idea. Whenever possible, download the applications if you can, play with the wallets, read the whitepapers, research the founders. Think for yourselves! This space changes incredibly quickly, so you’ll need to have an open mind and a curious one at that if you want to keep up. Enjoy the challenge of that and realize you’ll not be able to know everything all at once.