Ethereum for Dummies

Hey All,

I want to make a thread for people that don't have any technical knowledge, like myself. I was hoping some of the ultra smart people in this forum can answer some questions that some of us might be too embarrassed to ask.

Can someone give a non-technical description of what Ethereum is?

My basic understanding is that Ethereum is a new block chain, similar to BTC and other coins. But, a Decentralized Application is built on top of it that allows developers to design Decentralized Autonomous Corporations and other stuff? Is this about it?

How do holders of Ethereum units, or whatever they are called benefit from new DACs being developed?

Thanks

Comments

  • scriptioscriptio Member Posts: 5
    I would be interested to read up a Dummy Guide as well. Most of white paper on Ethereum is like Greek and Latin to me!!:)-
  • bomb7bomb7 Member Posts: 4
    "How do holders of Ethereum units, or whatever they are called benefit from new DACs being developed?"

    All kinds of decentralized applications can be built on top of Ethereum. I think you`re asking how holders of Ether currency units will benefit from all these other applications not necessarily related to sending Ether?

    I`m a non-tech guy myself and I asked a more sophisticated friend of mine a similar question to yours. He said that the Ether currency would grow because it is used to pay transaction fees on using the Ethereum blockchain, no matter what kind of application.

    Apologies to my friend if I slaughtered his words and got it wrong. lol
  • khandakhanda ChicagoMember Posts: 8 ✭✭
    "Ethereum is the Engine, Ether is the fuel."

    Contracts are a piece of programmable code or rules (business/contract). Ether powers the Contracts.

    Contract code runs at a crypto location (address). Therefore, presence of Ether is a mathematical condition that needs to be met before a contract executes. The contract dies if business rules say so or if Ether runs out.

    In Bitcoin protocol, a crypto address has monetary value ("store of value") = BTC. In Ethereum protocol an address is a "store of logic" powered by ETH (ether).

    My rendition for lay people and myself - open to amendments.
  • JakeThePandaJakeThePanda Member Posts: 15
    Thanks guys. Two parties entering the opposite side of a gold trade, is that an example of a contract?
  • salwilliamsalwilliam Member Posts: 27 ✭✭
    edited February 2014
    A gold trade happening in Ethereum would be conducted via a contract, and some ether would be required in order to process the trade.

    Ether should gain in value for the same fundamental reason Bitcoin has, because it provides utility the world wants, and supply is limited.
  • JakeThePandaJakeThePanda Member Posts: 15
    Thanks.

    Are there transaction fees and do they go to Ether holders as dividends?

  • alowishusalowishus Member Posts: 1
    @salwilliam: could a (gold) contract be settled in BTC? could the transaction fees be anything else than Ether?
  • salwilliamsalwilliam Member Posts: 27 ✭✭
    @alowishus I believe that any contract can be scripted to be settled in any asset, but that fees in ether are necessary for all transactions. Additional fees in different assets could also be imposed.
  • JakeThePandaJakeThePanda Member Posts: 15
    As of right now, Ethereum is just a platform that developers can use to build DACs on, correct?

    So, a developer would actually have to make a DAC for gold trading?
  • MilanMilan San Diego, CAMember Posts: 46
    I'd love to hear more about how exactly a gold trade would work. It seems to me that this would be impossible to do without trusting either your counterparty in the trade, or some third party arbitrator. I'm sure people have thought about this a lot more than I have though, anyone care to share their thoughts?

    I'm talking about the transfer of physical gold, not some shares of a "gold backed" asset. Perhaps this is the source of my confusion.
  • giannidalertagiannidalerta Miami, FLMember Posts: 76 ✭✭✭
    @milan there was a thread on btctalk of someone experimenting with ripple doing it with silver dimes. You had to trust him, the experiment seemed to suceed. If I can find the link I will post it.
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    Hi there, this is old thread I found on google..... Has an Ether for Dummies resource developed? I am looking for some basic info and also have some specific questions for our family businesses and how Ethereum could fit in....
  • GaryOakGaryOak Member Posts: 4
    Khanda and salwilliam with the W, on this one. ["In Ethereum protocol an address is a 'store of logic' powered by ETH (ether)."] + ["A gold trade happening in Ethereum would be conducted via a contract, and some ether would be required in order to process the trade."]

    Meaning, you can't buy shit without ether, not because of the "value" of ether, but because the PROCESS of buying shit (through a contract) requires ether.
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    What or who is Ether replacing in a contract execution?
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    edited March 2016
    Ok I have been reading all evening. I get that programs run simultaneously on each connected device on the network, I do not yet understand how Ether, the coin, plays in. I saw it referred to as a fundraising tool for Ethereum, but what beyond that? You say Ether will be accepted on the network, by who? The user of these apps?
  • JabulonJabulon Member Posts: 45
    @CatherineBleish Ether, the coin, is required to write contracts/Dapps to the ethereum blockchain and run them on the network. If you read up on 'gas' in ethereum, this will explain it for you. As with Bitcoin, Ethereum runs on a distributed network of volunteer nodes, whose participation is incentivised - monetarily - in the form of tx fees paid in 'gas', as well as block rewards. Right now those fees and rewards go to miners, and later when Ethereum goes proof-of-stake they will go to 'stakers' (which in ethereum means a kind of bonded validator), who receive 'ethers' for their efforts. In general, this follows the self-bootstrapping process common to all cryptocurrency networks. Over time and with the acceptance and further development of the technology, Ether (the coin) becomes a recognized, fungible asset, a desired commodity in limited supply, which trades on exchanges, and which can be used as cash in an increasing variety of situations.
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    Jabulon said:

    ...and later when Ethereum goes proof-of-stake they will go to 'stakers' (which in ethereum means a kind of bonded validator), who receive 'ethers' for their efforts. In general, this follows the self-bootstrapping process common to all cryptocurrency networks.

    @Jabulon - what do you mean bonded validator.

  • JabulonJabulon Member Posts: 45
    It means, in-effect, that stakers will put up a security deposit in order to participate in running the protocol. It is a strategy for making malicious behavior economically unfeasible.
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    How does it disincentivise malicious behavior?
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    And what are they competing for? To win ether? Then what?
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    And if the bitcoin blockchain is a ledger of value transferred, with attached files, record keeping, alt coins built on top, etc... what does the ether ledger track? How do you avoid data overlod with proframs all running through ether? Or is ether simply the trigger???
  • JabulonJabulon Member Posts: 45

    How does it disincentivise malicious behavior?

    It does so by 'punishing' it with the forfeiture/destruction of the deposit.
  • JabulonJabulon Member Posts: 45

    And if the bitcoin blockchain is a ledger of value transferred, with attached files, record keeping, alt coins built on top, etc... what does the ether ledger track? How do you avoid data overlod with proframs all running through ether? Or is ether simply the trigger???

    There are a lot of resources already available on this forum and ethereum subreddit concerning the basics of what Ethereum is, does, and how it does it. I'd begin here: https://www.reddit.com/r/ethereum/comments/3vxvlx/starter_guide_almost_all_the_links_youll_need_to/

    And what are they competing for? To win ether? Then what?

    Uh...then you have a functioning distributed consensus protocol, on which you can do things like send and receive crypto tokens, and, in the case of Ethereum, deploy functioning smart-contracts. As the youtube video expresses it, Ethereum is a 'world computer', on which you can do stuff. But where do you think those computing resources come from? Right now, during PoW mining, they come from hordes of people running equipment that looks like this:
  • CatherineBleishCatherineBleish The Bitcoin BusMember Posts: 18
    Thank @Jabulon - great info and resources, I will dig in today!
  • JabulonJabulon Member Posts: 45

    Thank @Jabulon - great info and resources, I will dig in today!

    Sure Catherine, happy digging. You might find this vid helpful too as far as basic questions, but answered in good depth and exploring implications.
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