0.1 Ethereum Basics

Introduction

The Ethereum blockchain is an open source and decentralized platform used to create Decentralized Applications, called “Dapps”, and Smart Contracts. Ethereum was built to run in absence of downtime, control from any centralized source, or third party interference.

Learning Objectives

  • Understand the fundamentals of the Ethereum blockchain

  • Read about the purposes of smart contracts and decentralized applications

Reading List

Key Points

  • Decentralized Applications

    • Runs on a network of computers instead of a single computer system, which means there is no central authority

    • Are open source, meaning anyone has access to the codebase, and are built using the logic from Smart Contracts

  • Smart Contracts

    • A program which executes an agreement between two parties automatically without third party interference.

    • Once a buyer and seller have entered into an agreement via smart contract, there is no longer counterparty risk or risk of a third party altering the agreement.

Review Questions

  • What are the advantages and disadvantages of using a smart contract versus a traditional contract?

  • Describe how a decentralized application functions.

  • Can you imagine any shortfalls with Ethereum?