It's helpful to understand the Internet before learning about Ethereum.
Today, our personal data, passwords, and financial information are essentially stored on other people's computers or in the clouds and servers owned by giants like Amazon, Facebook, Google, Alibaba Cloud, Baidu Cloud, etc.
This setup has many conveniences, as these companies deploy operational experts and management teams to help store and protect data, eliminating the costs associated with hosting and uptime.
However, with this convenience comes vulnerabilities. It is understood that hackers or governments can gain unwanted file access by influencing or attacking third-party services without the user's knowledge, meaning they could steal, leak, or alter important information.
Brian Behlendorf, the creator of the Apache Web Server, even labeled this centralized design as the 'original sin' of the Internet. Some argue that Behlendorf's Internet always meant to be decentralized, and a fragmented movement has emerged around using new tools, including blockchain technology, to help achieve this.
Ethereum is one of the latest technologies to join this movement.
While Bitcoin aims to disrupt PayPal and online banking, Ethereum's goal is to use blockchain to replace third parties that store data, transfer mortgages, and track complex financial instruments.
The 'World Computer'
In short, Ethereum aims to become a 'World Computer' to decentralize the existing client-server model, and some believe it democratizes it.
Through Ethereum, servers and clouds are replaced by thousands of so-called 'nodes' run by volunteers globally (thus forming the 'world computer').
The vision is for Ethereum to provide the same functionality to people around the world, enabling them to offer services on top of this infrastructure.
For example, when scrolling through a typical app store, you will see a variety of colorful blocks representing everything from banking and fitness to messaging apps. These applications rely on companies (or other third-party services) to store your credit card information, purchase history, and other personal data somewhere, often on servers controlled by third parties.
The applications you choose will also be managed by third parties, as Apple and Google will maintain and manage (or in some cases, vet) the specific applications you can download.
Take online document services like Evernote or Google Docs as an example.
If everything goes as planned, Ethereum will return control over data in these types of services to their owners and return authorship rights to their creators.
The idea is that no entity will be able to control your notes any longer, and no one will suddenly prohibit the application itself, temporarily taking all your notebooks offline. Only users can make changes, and no other entity can.
Theoretically, it combines the past control of information by people with the easily accessible information we are accustomed to in the digital age. Every time a note is saved, edited, added, or deleted, every node on the network makes changes.
Ethereum looks at keywords
Open source systems, smart contracts, virtual machines, and peer-to-peer involve technical aspects, which we'll explain in simpler terms:
Open Source: An open-source system is one where the source code is available for people to modify and learn from. This process allows Ethereum developers to provide source code to developers to meet their own project needs.
Smart Contracts: A computer protocol designed to spread, verify, or execute contracts in an information-based manner. The highlight of smart contracts is that they allow for trusted transactions without third parties, which can be tracked and are irreversible.
Virtual Machine: Like all blockchain technologies, Ethereum uses nodes running on its own computers to ensure security while maintaining trust. Each node participating in the Ethereum protocol runs software on its respective computer, which is referred to as the Ethereum Virtual Machine.
Peer-to-Peer: As mentioned in the previous Bitcoin example, simply put, it allows users to transfer and trade directly without needing confirmation and authorization from a governing authority.
I explain it this way: from a literal perspective, you still do not understand what Ethereum really is, especially for many blockchain investors; Ethereum is just an investment tool, buying it is for making money, and they understand nothing else.
If the Bitcoin system is viewed as blockchain 1.0, then Ethereum is undoubtedly the model for blockchain 2.0, achieving such a high status based on the Ethereum blockchain, Ethereum's smart contracts, and token standards, resulting in a surge of tokens that make Ethereum a popular ecosystem second only to Bitcoin. As an outsider, how do I understand it? Let's take a simple example.
Taking WeChat mini-programs as an example, if WeChat is compared to Ethereum, then developing various mini-programs on WeChat is similar to developing various DApps and other applications on the Ethereum platform. The WeChat developers have set the entry for mini-program development to be open-source and modifiable, allowing global companies and project developers to develop their mini-programs similar to apps within the WeChat ecosystem. Ethereum continuously expands its ecosystem through its compatibility and scalability, with its role becoming increasingly prominent.
How to Use Ethereum
The idea of using Ethereum sounds daunting, but it might yield rewards.
If the 'unstoppable world computer' develops as planned, it could offer alternatives to Facebook and Google, which many people use daily (as described in 'What is Ethereum?').
Ethereum may not be as intuitive as we know it today, but it can still be accessed; anyone with 'ether' and a computer or smartphone can try to program using the platform's unique code to update the blockchain ledger.
Ethereum Wallet
First, you need a secure place to store your ether (or at least a place to store your private key). This brings us to Ethereum's 'wallet.'
One warning is that losing a private key is much more significant than misplacing a password: it means losing your ether forever.
Eliminating trusted parties is a double-edged sword. Although intermediaries are no longer needed to verify transactions, there is no help desk to assist you in recovering keys.
With this in mind, there are many wallet options for storing cryptocurrency: desktop wallets, web wallets, hardware wallets, and paper wallets.
Choosing one depends on your preferences for convenience and security. Generally, these two concepts are contradictory: the more convenient, the worse the security (and vice versa).
Desktop Wallet
Desktop wallets can run on your PC or laptop. One option is to download an Ethereum client (a copy of the entire Ethereum blockchain). There are several Ethereum clients written in different programming languages with varying performance compatibility.
This process may take several days and will only increase as Ethereum grows. Then, wallets need to stay in sync with the latest transactions on the blockchain.
Mobile Wallet
Mobile clients or 'light' clients need to download less data to connect to the network and make transactions, making them more suitable for downloading to smartphones.
Light client options are more convenient but less secure. Full Ethereum clients provide a more secure way to receive transactions because they do not need to trust miners or nodes to send them accurate information; they verify transactions themselves.
Storing private keys on devices that are disconnected from the internet (a method called 'cold storage') is harder to hack and is best for storing large amounts of ether.
However, this method is not as easy to use as storing ETH on a smartphone or connected computer.
Hardware Wallet
Hardware wallets usually only require one or two fingers, making them a win-win situation. These secure devices can typically be disconnected from the Internet and can sign transactions without being online.
However, similarly, if you want to use ether frequently or on the go, this vault-like system is not a good choice.
Paper Wallet
Another cold storage option is to print or carefully handwrite the private key on a piece of paper (a 'paper wallet') and then lock it in a secure place like a safe. Online tools can generate key pairs directly on your computer rather than on a website's servers, which could make the keys vulnerable if the site is hacked.
If you have installed the necessary cryptographic packages for your preferred language, you can also generate keys using the command line.
To reiterate, if you lose the private key, it is gone forever.
Therefore, best practices are to take some extra time to create multiple copies of the private key and store them in different secure locations in case of loss or damage.
Ether (ETH)
The Ethereum system is the most widely used public blockchain system supporting comprehensive application development. Compared to Bitcoin, the Ethereum system falls under the category of blockchain 2.0, redesigned to address some issues of the Bitcoin network. The design of Bitcoin is only suitable for the cryptocurrency scenario, lacks Turing completeness, and does not have the concept of accounts that maintain real-time status, leading to efficiency and resource wastage issues caused by the PoW mechanism. The Bitcoin blockchain network suffers from scalability issues. As Bitcoin attracts more and more developers and technicians, some users have attempted to use the Bitcoin network for other cryptocurrencies or applications. However, developing blockchain applications independently is quite challenging; users need to master a wide range of software and hardware development skills and cryptographic algorithms, making blockchain applications not so easy for some users.
The emergence of the Ethereum system is to help users utilize blockchain technology more easily for application design. According to Buterin, the purpose of Ethereum is to create a more generalized blockchain platform that allows users to easily create blockchain-based applications, avoiding the need to establish a new blockchain to create an application. In simple terms, previous blockchains (like Bitcoin) were merely a single tool or at most a multi-functional tool suite, while Ethereum is the smartphone of blockchains, allowing users to build any 'application' they need using a smartphone. Thus, Buterin states that blockchain applications are not limited to cryptocurrencies; they have immense potential applicable across various industries, providing significant benefits to businesses and organizations of all sizes. By providing such a highly generalized platform, Ethereum allows users to build widely used applications without needing to create their own blockchain. Ethereum's vision is to become the 'World Computer': users can create blockchain-based applications as simply and quickly as using a computer, enjoying the decentralized and secure benefits brought by blockchain. This makes Ethereum's application prospects broad. Theoretically, Ethereum is a universal platform that can be used for various applications, but so far, most applications are related to finance. However, beyond financial applications, any environment that requires trust, security, and permanent storage could be significantly impacted by the Ethereum platform, such as asset registration, elections, government management, and the Internet of Things.
