Ethereum for beginners

The Ethereum logo
Ethereum launched about eight months ago. Today it is the second largest cryptocurrency. What makes the Ethereum project different from any of the thousands of other cryptocurrencies that exist? There are two huge reasons: (1) it is not a Ponzi scheme and (2) it is not just another Bitcoin clone.

However, what’s so special about Ethereum? It is a network of computers that make a new type of app possible. Today you send a message on Facebook, the data goes to some big Facebook data center and is then delivered to the recipient of your message. Facebook pays the data center. Facebook controls the server. Your data is their hands. Forever. Ethereum, on the other hand, introduces the decentralized app (dApp). When you send a message through a dApp, it goes out through a network of computers all over the world, owned by regular people, and every computer does a little bit of the work. All these computers are connected through computer software called Mist. This is a decentralized network. No single individual controls or owns the data.

But, hey, wait a minute! Why would I help others? It is my computer. I paid for it, and I pay for an internet connection, and I pay for electricity. Besides, I do not like to help my fellow man for free. Exactly. That is why all participating computers receive a reward for their work. But they do not get dollars. They are rewarded with a digital asset called Ether. Ether is the fuel that makes dApps run like gasoline makes your car run.

How can I use this Ether?
Computer owners who participate in the Ethereum network might want to monetize their work and sell Ether for dollars. dApp developers need Ether to run their dApps on the network, and they want to buy Ether with dollars. And so Ether is traded on cryptocurrency exchanges with an actual purpose besides speculation. At the time of writing, Ethereum has a market cap of about half a billion dollar, and 1 Ether sells for over $7. That is a very steep rise for something that didn’t even exist less than a year ago.

Why the name Ethereum?
It is a metaphor referring to ether, the hypothetical invisible medium that permeates the universe and allows light to travel.

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