Part I — The Blockchain Revolution
Part II — Ethereum And Smart Contracts
Part III — Wallets, Keys, And Accounts
Part IV — Transactions
Part V — Gas
Part IV — Consensus Algorithms
Money. One of mankind’s greatest inventions and the lifeblood of our society. Every single human, in every country and in every culture, has a primal connection to money since it symbolizes both surviving and thriving.
But money in and of itself is worthless. After all, money is just numbers in a computer.
It’s the value that money represents that has real worth.
As the world’s largest platform for executing Smart Contracts, the Ethereum blockchain has established a native medium for value.
It’s a medium where every kind of asset — music, stocks, bonds, loyalty points, art, intellectual property, carbon credits, real estate, video game items, digital collectibles, software licenses, anything you can think of— will be transacted and exchanged peer-to-peer without big third party intermediaries.
This has huge ramifications for society, and is a golden opportunity for you as a developer if you want to build some of the world’s first decentralized applications (a.k.a. “dApps”, “dapps”) that leverage blockchain technology like Ethereum.
In this 6 part series, you will get a bird’s eye view of how the high level pieces of Ethereum fit together so that you can begin your journey of becoming one of the world’s first blockchain developers.
So let’s begin with the rock bottom basics and learn how to summon this new tech genie in a bottle for the good of all.
There’s a global transformation of the Internet that’s happening, and we call it “Web3”.
This transformation has the ability to reduce intermediaries, unlock all sorts of digital assets, better safeguard our personal information, allow people to monetize their own data, and open up the global economy to millions of more people.
And this transformation is powered by three main technologies: distributed systems, cryptography, and the blockchain data structure.
These three main technologies, that in combination we refer to as “blockchain technology”, have the ability to reorganize the economic power grid and the status quo through massive decentralization.
That’s if we guide it correctly and stick to the principles behind its inception.
But before we begin to understand the complicated technology behind blockchain, we need to first understand the story behind “blockchain” and the emotional forces that are driving its adoption.
Every movement has a story, and you must understand the story behind “blockchain” if you want to develop for it. We call this story the “Blockchain Revolution” and it goes something like this…
We Humans Trade
We humans trade value with one another. Value and exchange regulate almost all aspects of human affairs. You create value everyday even though you may not be consciously aware of it.
We’ve been doing this since the beginning of recorded history. You give me an apple, I’ll give you a dollar. We transact with each other every single day.
On a planet of over 7 billion humans, we’re constantly supporting and adding value to each other’s lives through trade. Yet we’re almost complete strangers to one other.
Today We Rely On Institutions To Establish Trust
As societies have grown more complex over time, humans needed to build centralized institutions like banks, governments, and corporations to help us trade. These institutions mitigated the uncertainty we had about one another so that we could interact and trade more efficiently.
Today, we rely on big institutions or “intermediaries” to provide the trust we need for the fluid functioning of human society. Intermediaries like banks, credit card companies, governments, etc.
When the Internet arrived, we put all of our institutions online and it changed the way we trusted and communicated with each other. And new centralized platform marketplaces (like Amazon.com, Ebay.com, Alibaba.com, etc.) started facilitating a lot of economic activity.
These middlemen were needed to establish the trust that was necessary so we could easily transact online.
And for the most part, these big intermediaries have done a good job in providing the trust we need so that we can trade with one another.
The Wealth Gap In The Digital Age
But as these intermediaries have established the trust we need to trade with each other, they’ve also gained enormous power and wealth in the digital age. An era where data is considered to be more valuable than land.
And in an era of unprecedented economic growth, the largesse of the digital age has been appropriated mainly by these big intermediaries.
In other words, massive wealth is being generated but prosperity is declining for most. The economy is growing overall, but the middle class is growing smaller.
Is this the world we want to live in?
In 2008 our financial institutions collapsed. And as they collapsed, we lost trust in our financial institutions as trusted intermediaries since we were forced to bail them out.
It was a hard, bitter pill to swallow as we witnessed the leaders of these big institutions use our tax dollars for things like $1200 trash bins during a time when millions were losing their jobs.
That’s when Bitcoin slowly crept onto the scene.
Bitcoin proved to the world that something like money could be created without the need of a centralized government or bank which nobody ever thought was possible.
In a sense, it was money for the people by the people.
And the trust that came with this new form of money was established through code itself. Fully transparent code that everybody could read and understand.
What made digital money like Bitcoin an actual possibility was the fact that it solved something called the “the double spend problem”.
If I have $100 and I buy something from you with it, it’s really important that I no longer have that same $100. Because if I did then the money would be completely worthless.
Bitcoin was able to solve the double spend problem via its use of the blockchain data structure. That’s why the term “blockchain” is so prevalent. It’s the data structure that literally enabled the creation of digital value because it solved the double spend problem.
In a nutshell, a blockchain is a shared ledger that nobody owns or controls but everyone can see. It’s a snapshot in time that indicates who owns what at any given point.
And it’s updated by cryptographic consensus algorithms, not by any centralized institution.
Bitcoin demonstrated how we could remove the middleman (governments and banks) from controlling one of the most valuable assets we have in society: money.
Nobody ever thought this was possible before Bitcoin proved that it was.
Once Bitcoin solved the double spend problem, a world of new opportunities opened up. A world where every asset could be digitized, or have a digitized representation or token, and be traded as real value.
Because of the advent of blockchain technology, a new layer that sits on top of the Internet is being created called “The Internet Of Value”.
The idea behind The Internet Of Value is this: it’s the ability for any unit of value to be exchanged and sent across the world as quickly and easily as we send email.
For example, let’s say you were an artist that recorded a unique piece of music that delighted millions of people across the world. On The Internet Of Value, you would tokenize your musical asset, and your music could be traded just like currency.
To transfer ownership and the rights to your musical asset would be as easy as sending an email. And no corporation or centralized institution would sit in between you and your digital asset extracting exorbitant fees.
Because blockchain systems make use of Public Key Cryptography (which I will explain in Part III), you as the creator of your digital assets have full control over it. And only you as the creator have the right to monetize it.
Today, the control of how value gets created and exchanged is in the hands of big institutions. And they’ve benefitted immensely in the digital era.
But now, because of blockchains like Ethereum we’re able to develop applications that shift the locus of value creation back to the individual.
By creating a shared ledger that nobody owns but everyone can see, a ledger that is updated not by centralized computers but by cryptographic consensus algorithms, we’re creating a world where people are in charge of the value they create.
And the hope is that in this new dream we’re creating, wealth and prosperity will get spread back out to the edges instead of being consolidated within the hands of a few big intermediaries and the people who own them.
This means you can be involved with spreading wealth creation and prosperity.
As you begin to develop decentralized apps, you should always keep in mind that decentralization is one of the foundational tenets of “blockchain”.
In this new evolution of the Internet, instead of centralized institutions establishing the trust we need to trade with each other, code itself is establishing trust and reducing the need for middlemen.
And it’s all transparent. And this is where you as a developer can make a difference.
In this new era of the Internet, transactions happen peer-to-peer without the need for centralized platforms that have historically acted as the gatekeepers of trust.
If you encounter any new startup that sounds like a status quo centralized solution but is branded using the term “blockchain”, you should always remain skeptical.
That’s because it defeats the purpose of why we’re evolving the Internet to begin with.
Always remember: decentralization is key.
You now have a general idea of the story behind “blockchain”, or the “why” behind this next evolution of the Internet we call Web3.
You understand that since blockchains solve the double spend problem, this in turn has enabled the creation of all forms of digital value.
You understand that as we develop this new layer on top of the Internet called “The Internet Of Value”, it will enable us to trade and send any quantum of value as easily as we send email today. And the Ethereum blockchain serves as the foundation for doing this through tokenization.
And finally, you understand why decentralization is so critical to the growing adoption of this new technology since it spreads value back to the edges and reduces the need for intermediaries.
In the next article of this series, you’ll get a better understanding of what Ethereum is from both a practical and computer science perspective. And you’ll gain a greater understanding of the major new innovation Ethereum brings to the blockchain space: Smart Contracts!
Next. Part II — Ethereum And Smart Contracts (Coming soon!)
Source: Crypto New Media