Surely anyone who learns about bitcoin, blockchain or digital money (cryptocurrency) has come across names like Ethereum (ETH), smart contract (SC), ETC20 Token or ICO. These are the concepts that are popularized by Ethereum – blockchain technology has been groundbreaking in recent years.
If bitcoin is the revolution in decentralized e-payment with blockchain technology. Then Ethereum ushered in a new era allowing internet applications to operate on the blockchain platform without being bound by any organization or individual. So what is Ethereum?
1 – Ethereum
Invented by Vitalik Buterin – Canadian programmer, Ethereum is a blockchain technology, and also a platform that allows users to build decentralized applications on the blockchain platform.
The revolution and also a key difference between Ethereum and bitcoin is the smart contract. So what is Smart Contract?
2 – Smart contract (SC)
Smart Contract is a computer program written in a Turing-complete programming language (the difference with bitcoin). This program is translated into a compiler code (bytecode) and stored on the blockchain as SC with a unique address.
The user can use this site to interact with the SC and to execute the tools provided by the SC. This execution is done by the EVM (Ethereum Virtual Machine) virtual machine that comes with the Ethereum Client that miners use.
Each SC can store its own values and the change must be consensused by the blockchain as each change equals 1 transaction.
3 – ICO
Although ICOs were born very early, this form of fundraising has only gained popularity thanks to ethereum.
ICO (short for Initial Coin Offerring) is a popular form of raising capital with digital money. This is how blockchain startups or Distributed Ledger Technology (DLT) often use to raise capital. Instead of contributing with fiat money, investors will contribute with fiat money.
A common capital call on the Ethereum platform consists of the following components:
– White paper: description of the project
– Golden Book: description of technical properties, theory, equations and mathematical proofs (depending on the project)
– Founders, operations team, advisory group
– Roadmap, minimum viable product (MVP)
– ERC20 Token: a SC validating the investor’s ownership with a part of the project. After the project is officially put into operation, this token will be separated from the ethereum network and transferred to a corresponding frame of reference.
– ICO Contract: convert the investment money (ethereum) into a certain token of the project and confirm ownership of this token for the investor.
With the explosion of Blockchain and cryptocurrencies, raising funds with ICOs has become an extremely efficient method of raising capital. However, the risks that come with it are also very great when there are currently dozens of ICOs and ERC20 tokens sprouting like mushrooms after rain every day. In addition, countries such as China, South Korea have also begun to tighten and even ban completely all forms of ICO for citizens of these countries. However, there are also quite successful ICOs and are gradually asserting the importance of blockchain technology in particular as well as DLT in general.