Decentralized applications becoming more and more important in the past 10 years, and have the benefits of massively reducing cost and barriers to entry, preventing censorship, preventing from a single point of failure and ensuring trust between all the parties involved in an interaction. BitTorrent was the first Decentralized application, It allows user’s to share files with anyone in anywhere in the world. Then in 2009 Satoshi Nakamoto come up with an idea of distributed database and used it to built first decentralized currency called Bitcoin.
Bitcoin has a built in payment system that requires no middleman to exist but it has some missing feature like built in scripting/programming language. Therefore in late 2013 Vitalik Buterin introduced Ethereum that’d have all the features that bitcoin missing. Ethereum is a smart contract and Distributed application (in short DApps) platform that allows people to built unstoppable censorship resistant application on the blockchain.
Ethereum uses state transaction which is the modified version of nakamoto consensus instead of UTXo model which uses Un-Spent transaction Outputs and inputs for transferring value/balance (in btc), but in Ethereum wallet addresses holds all of balance.
Ethereum uses Proof-of-work (PoW) consensus algorithm as of now, in every 14 seconds new block has been generated. In PoW miners solve very complicated cryptographic puzzles to “mine” a block and add it to the longest chain of blockchain, PoW requires a huge amount of computation resources and it also makes it very slow as 14 transaction per second.
Therefore Vitalik Buterin, Vlad Zamfir and few others come up with solutions like Casper & Sharding. Casper is a protocol that help ethereum to shift PoW to Proof-of-stake. Sharding is a method that will help ethereum to scale.
Ethereum has Built in programming language called Solidity, to create dApps Ethereum uses Ethereum Virtual machine (EVM). EVM is a run-time environment for creating dApps on Ethereum. Where as Ether the currency is used as a fuel in ethereum ecosystem in order to create a smart contract or dApps.
Ethereum is designed specifically for peoples to built distributed applications, Decentralized marketplace, Decentralized Governance and any kind of application that they wants to create. Ethereum can be used to built financial application that are fully trustworthy and transparent because they run on the blockchain. Ethereum is an application programming platform so what can be built on Ethereum is only limited by the creativity of their developers
Why use Ethereum?
We all use some kind of application on the internet and as a developer you need to submit your application to the App store or play store and risk having it removed by the company for any certain reasons. Everything that is centralized has risk of attack because it offers a single point of failure and Ethereum solves that problem. Everything that built on Ethereum do not requires their users to trust on the developers with their personal information or funds. Ethereum has the largest developers in whole crypto industry so it also has developer community advantage.