What is Ethereum? - this is what you should know

Ethereum is a Distributed Accounting Technology (DTL) that integrates a complete Turing programming language. At a general level, it is a blockchain computer that allows anyone to write intelligent contracts and create decentralized applications from the writing of logic in just a few lines of code.

Nowadays, it is difficult to speak of cryptocurrencies without mentioning Ethereum, and that beyond being a virtual currency, the fact that it is a digital distributed platform has aroused the interest of many investors on a global scale.

In principle, Ethereum was created as a protocol to improve Bitcoin, and overcome its limitations in relation to the programming language, offering advanced benefits such as retirement limits, gambling market, custody over the blockchain, financial contracts, etc. All this, through a generalized programming language.

In relation to its cryptocurrency status, Ethereum differs from Bitcoin in several aspects, with the algorithm and block type being the most characteristic. In addition, in Ethereum there is no cryptocurrency limit, as with Bitcoin.

What is Ether?

Ether is the virtual currency of Ethereum, which unlike Bitcoin, does not have a deflationary level. This means that this cryptocurrency will not reach a maximum point of circulation and will not cease to exist, unless users of the platform vanish. For that reason, although Bitcoin is much more used in the present, the approach proposed by Ether is much more powerful to be the substitute of traditional currencies.

Ether is the prize given to developers for maintaining the network and writing quality applications.

However, it is not precisely its cryptocurrency status that has turned Ethereum into the center of attention of thousands of investors around the world, since there are many cryptocurrencies that have similar characteristics in the network.

Smart contracts: the novelty in Ethereum

The success that Ethereum raises is the possibility of using the blockchain for something more than a distributed cryptocurrency. In this sense, the creation of smart contracts much more powerful than those allowed in Bitcoin.

But, what is a smart contract? Well, it is a piece of software code that is executed without limitations, and that usually involves the execution of a payment. In simple words, the intelligent contract avoids manipulation (it can not be modified or falsified), since it is not executed through a centralized server, but through a distributed network.

What is the utility of these smart contracts?

With these contracts it is possible to perform many of the things that the financial system allows, including products and insurance, without this involving the intervention of an intermediary.

Insurance consists of paying a premium to an intermediary to assume the commitment to pay for any event. This relationship is based on trust in the intermediary, similar to the confidence we have that an insurance company will pay the expenses of a certain accident.

Smart contracts avoid the need to trust someone, since the commitment to pay and the premium will be subject to the contract that will be carried out automatically. In this way, the premium reaches the insurer, and if the event occurs, the money will go to the insured. These contracts are also applicable to savings accounts and other financial products that require trust in someone, as well as online voting systems for economic purposes.

Ethereum represents the decentralization of storage archives, computing and prediction markets, among other concepts, which allows it to increase the performance of the IT sector, as well as providing a substantial boost to other 'peer to peer' protocols, adding an unprecedented economic layer.