What is Ethereum. A guide for beginners.

Ethereum Guide
The technology of blockchain is associated with Bitcoin although it has many other ways of use. Bitcoin is just one of hundreds of applications that use this technology.
Sally Davis, a technology columnist for the Financial Times, described the technology of the blockchain as follows: "The Blockchain for Bitcoin is the same as the Internet for e-mail. It is a large electronic system in which you can create applications. Currency is one of these applications. "
At one time, creating applications based on the blockchain required a lot of experience and knowledge in programming, cryptography, and mathematics. Times change. Before very complex applications are now being actively developed and implemented. It is made possible by the Ethereum, which enables developers to use the necessary tools to create decentralized applications.
Ethereum for beginners
Ethereum is an open software platform based on blocking technology that allows developers to create and deploy decentralized applications.
You ask: Is the Ethereum in a sense similar to Bitcoin? It looks like this, but not really.
Like Bitcoin, Ethereum is a distributed open network based on a blockchain. Between them there are significant technical differences. The biggest difference is that Bitcoin and Ethereum differ in purpose and capabilities. Bitcoin offers one application based on blockchain technology, namely the system of electronic money transfer between individuals, which allows you to make online payments using Bitcoins. Bitcoin's blockchain is used to track ownership of digital currencies (bitcoins). A blockchain of the Ethereum provides the work of the program code of any decentralized application.
In the blockchain of the Etherium, instead of mining of bitcoins, the ether is extracted. This is a token that "feeds" the network. The ether serves not only to be a convertible cryptocurrency. It is used by application developers to pay for services and commissions for transactions in the network of the Ethereum.
Gavin Wood, co-founder of the Ethereum, spoke about the technology of blockchain: "Bitcoin is the first and most important currency; it is one application based on the blockchain. But technology is not limited to the only one application. Let’s take the example with e-mail. It is one way of using the Internet, and it has helped to popularize it, but it provides many more opportunities. "
What is a “smart contract”?
It is a computer code that can facilitate the exchange of money, property, shares or any valuables. When working on a blockchain, the "smart contract" becomes an automatic computer program that independently executes the code when certain conditions arise. "Smart contracts" are working on the blockchain. A “smart contract” can execute the code as it was prescribed, without the influence of censorship, idle time, fraud, or third-party interference.
All blockchains are capable of processing code. But, nevertheless, most of them are limited. The platform of the Ethereum is different from them. It doesn’t provide a set of limited operations; it allows developers to create the operations that they need. Because of Ethereum developers can create thousands of applications that work in different ways.
Don Tapscott: "The blockchain of the Etherium has unusual possibilities. For example, it allows you to create 'smart contracts'. The name reflects their essence. It is a contract that works automatically and implements enforcement, management, execution and payment. "
The Ethereum Virtual Machine
Before the creation of the Ethereum, applications based on the blockchain could perform only a limited set of operations, as it was described above. Bitcoin and other crypto-currencies were developed only in order to carry out the transfer of digital money between individuals.
And once the developers have encountered a problem. It was necessary to expand the functionality offered by Bitcoin and other applications, which is difficult and time-consuming. Or create a new application based on the blockbuster and a completely new platform. Realizing this, the creator of the Ethereum, Vitalik Buterin, developed a new approach: "I thought that people from the bitcoin community had incorrectly approached the solution of the problem. They sought to make separate applications and didn’t try to cover each variable of using in a so-called ‘protocol for all cases’”.
The innovation of the Ethereum is a virtual machine (EVM). It allows you to run any program, regardless of the programming language on which it is written. Because of the Ephereum virtual machine, the process of creating applications based on the blockchain becomes easier and more efficient. Instead of creating a new blockchain for each application, Ethereum allows to develop thousands of different applications on a single platform.
Where to use the Ethereum
Any centralized services can be decentralized with the help of the Ethereum. Starting from the obvious services such as issuing loans provided by banks to intermediary services that many people don’t think about, for example, registering ranks, titles, voting systems, regulating legal norms and so on.
The Ethereum can also be used to create decentralized autonomous organizations (DAO). DAO is a completely autonomous, decentralized organization without a single leader. The work of such organizations provides the program code, a set of "smart contracts" written on the blockchain of the Ethereum. The code replaces the charter and structure of the traditional organization, while eliminating the need for people and centralized management. Everyone who acquired tokens owns this organization. However, tokens are not equated to shares, but serve as deposits that give people the right to vote.
What are the advantages of the Ethereum, as a decentralized platform?
• immutability: third-party people can not change the data;
• protection from interference: applications run on a network formed on the basis of agreement, so censorship is impossible here;
• security: applications do not have a single point of failure, security is provided through cryptography, so they are protected from hacker attacks and actions of scammers;
• no downtime: applications never stand idle and don’t fail.
Disadvantages of decentralized applications
The code for "smart contracts" is written by people and the quality of the work of the "smart contract" depends on the programmer. Unintentional errors or omissions in the code harm the contract. If an error is found in the code, you can stop the attack only by agreeing of the network and rewriting the corresponding code.
The Future of the Ethereum
By providing a convenient platform that gives people the opportunity to use blockchain technology, the Ethereum stimulates the growth of a decentralized world economy. Decentralized applications can penetrate hundreds of spheres and industries, including finance, real estate, education, insurance, healthcare, public sector.
The Ethereum platform also helps change the way you use the Internet. Decentralized applications shift the focus from the Internet of information where we instantly browse information and share it, to the Internet of values where we can instantly share values without intermediaries.
And this is only the beginning. Considering the huge number of interesting applications to be developed in the future, we can only anticipate what unimaginable opportunities we will receive in the near future.