Instead of being just a cryptocurrency, like Bitcoin, Ethereum also has features which effectively makes it a huge decentralized computer.

Quick review of blockchain

Note: For a full primer on blockchain, read the guide here: The Ultimate Guide to How the Blockchain Works.

A blockchain is simply a database. It’s an ever growing database of certain kinds of data and has a few remarkable properties:

1. Once data is stored in the database, it can never be modified or deleted. Every record on a blockchain is permanent for eternity.
2. No single individual or organization maintains the database — it's distributed so that many (tens of thousands) individuals have a copy of the database with themselves.

To understand how several people are able to keep th...

Almost a decade ago, Satoshi Nakamoto, the creator of Bitcoin, silently disrupted trust-providing organizations, like banks, with an eight-page long research paper describing how money can be decentralized (through Bitcoin). At the time, not many people understood the potential that those eight pages concealed within themselves.

The potential isn't just in decentralizing money — but in decentralization itself. In those eight pages, Nakamoto didn’t just explain how we can regain control over our money — he offered a new way for strangers to safely collaborate with each other.

Here, we discuss five different ways blockchain will fit into your company in less than ten years from now.

Because of its unique properties, blockchain technology can be used in many different industries, ranging from banking and accounting to the entertainment industry.

Contracts

What would you call a business that isn’t “doing bus...

Incentives

Why does everyone spend resources doing the calculation when they know that someone else will calculate and announce it to them? Why not sit idle and wait for the announcement?

Great question. This is where the incentives come in the picture. Everyone who is the part of the Blockchain is eligible for rewards. The first one to calculate the sealing number gets rewarded with free money for his efforts (i.e. expended CPU power and electricity).

Simply imagine, if #5 calculates the sealing number of a page, he gets rewarded with some free money, say $1, that gets minted out of thin air. In other words, the account balance of #5 gets incremented with $1 without decreasing anyone else’s account balance.

That’s how Bitcoin came into existence. It was the f...

Generating a Seal (aka Proof-of-Work)

We’ll use this magic machine to generate a seal for our page. Like always, we’ll start with an imaginary situation.

Imagine you're given two boxes. The first box contains the number 20893. I, then, ask you, “Can you figure out a number that when added to the number in the first box and fed to the machine will give us a word that starts with three leading zeroes?”

Before we learn how we can seal the page, we need to know how the seal works, in general. And as a pre-requisite, we will introduce…

The Magic Machine

Imagine a machine surrounded by thick walls. If you send a box with something inside it from the left, it will spit out a word containing something else.

[Jargon Box] This machine is called ‘Hash Function’. So, for today, these are ‘The Magic Machines.’

The requirement of this method is that there must be enough people who don't want to depend on a third-party. Only then can this group maintain the register on their own.

“It might make sense just to get some Bitcoin in case it catches on. If enough people think the same way, that becomes a self-fulfilling prophecy.”  ~ Satoshi Nakamoto in 2009

How many are enough? At least three. But for our example, we will assume ten individuals want to give up on banks or any other third-party that manages transactions. Upon mutual agreement, they have details of each other’s accounts all the time — without knowing the other’s identity.

For every complex problem there is an answer that is clear, simple, and wrong. — H. L. Mencken

The Current System

Imagine Joe is your best friend. He’s traveling overseas and on the fifth day of his vacation he calls you and says: “Dude, I need some money. I’ve completely run out.”

You, being the nice person you are, reply “sending some right away,” and hang up.

In the last section we learned that the software and apps executed by Ethereum Virtual Machine are called smart contracts. A human being and a smart contract are both seen as users on Ethereum. Whatever a human user can do, a smart contract can do too, and then some.

Smart contracts act exactly like any other human user in the network. Both of them can send and receive ether just like any other currency.

If you are in the startup ecosystem — or just a casual reader of tech sites — you must have seen that the majority of the fundraising stories in the past few months had a new term attached to them — ICO, short for Initial Coin Offering. The fundraising didn’t happen by selling out the equity of the company but by selling something called ‘tokens.’

It might be hard to believe for some, but companies have actually raised more money through ICOs than from VCs in 2017. Getting money for your business is of course awesome, but we believe that ICOs are more than just a tool to raise some capital.

To explain the economics and incentives behind the ICOs, we’ve put together this ultimate guide for you to understand ICOs.

There has been a lot of flux and discussion in the bitcoin community about what happened on August 1, 2017 and what it means for the future. Prior to the split that created Bitcoin Cash (BCH), the Bitcoin community was faced with a lot of unanswered questions: Will the cryptocurrency split into two new ones? Will it not? What is BIP 91? What is BIP 148? What is SegWit?

This guide will walk you through the whole situation as it unfolded, and to help you understand what actually happened and why the bitcoin ended up getting split into two — Bitcoin (BTC) and Bitcoin Cash (BCH), it’s best to take a look at one of the fundamental issues of cryptocurrency and the various proposed solutions.

On one side, there are the people who manage the open source software for bitcoin. They are the organisation/community that keeps the development on the bitcoin protocol running. On the other side are the miners, who deploy computing resources to run the bitcoin network (blockchain). Both sides are crucial to keep the bitcoin running — one side can’t do it without the other. To fully understand the ...