In this basic overview, we will discuss just what makes a specific. rising cryptocurrency, Ethereum, so special.
The recent rise in price of Bitcoin has been all over the news as some investors suddenly became billionaires and with this excitement, more and more people have invested in different forms of cryptocurrency. But what drove investors to cryptocurrency in the first place? After all, we have a perfectly functioning currency system already. Even if it uses the next generation technology, why put your money in digital currency?
As of right now, majority of applications work by using a centralized network of computers. When you send something over a specific app, that information must first pass through the company’s database and servers before being sent over to the recipient. In cases like these, information can be stored without the user’s realization. If the company’s servers are ever broken, the entire application is down until they fix it and can be prone to getting sensitive information stolen such as credit card information.
No computer can store the complete message on a decentralized network.
Ethereum instead uses a decentralized network to spread information around the world. What this means is that information from a sender is sent to a network of personally owned computers like yours or mine. Each computer does a little part of the work which eventually combines into sending the information to the recipient. It is unlikely for the network to not work as it would need all computers on the network to be down.
Of course, processing this information isn’t free. Electricity bills and hardware costs are not going to pay themselves. So what the network does is reward computers for their work with Ether, the fuel of Ethereum. As owners continue to build up Ether for sharing their processing power, they can sell Ether for real dollars to developers that need Ether to run their application on the network.
One of the most important factors of Ethereum is security. It is pretty much impossible to cheat the blockchain system and create and delete transactions. Each digital currency is secured by a mathematical algorithm that makes it extremely difficult to solve and break. This is system is less likely to be hacked into than any other system.