We have pondered upon the question What is Ethereum Blockchain in the previous blog, and now it's time for us to discuss Why we need Ethereum Blockchain.
So far we got to know how good this technology is, but the next obvious thing to ask was, why do we need it, what was the problem which blockchain solved.
We are going to look at why it was invented and how it is going to help us. Before you read any further, make sure you have read the previous article for a better understanding.
Let's jump right in! 🚀
Why do we need blockchain at all?
Blockchain offers a magnificent mechanism to make transactions in a decentralized manner. Decentralization, is almost a staple word in web3 space, but what does it mean and why do we need it? Decentralization means the distribution of power from a central authority and handing it over to the masses.
The need for decentralization arises when certain powerful entities misuse our property which we have willingly or unwillingly handed over to them. A fairly good example of banks was given in the previous where we talked about how the bank can manipulate and share our data and money with whoever they want to without our concern.
The blockchain is managed by thousands of computers throughout the globe, no one is the owner of all those computers, thus storing data, and also the power distribution is in a decentralized manner.
But if data is decentralized and anyone can see it, how is that helpful? Remember that our data is passed through some complex mathematical(hashing) functions, which are solidified in a block that is forever immutable. Thus, making it impossible for anyone to be able to manipulate it.
Blockchain help us build a system which is -
- Secure - It is secure as the data is immutable in blockchain and cannot be misused.
- Trustless - We do not need to trust some entity for our data safety and transactions, we just have to believe that math works perfectly.
- Censorship-Free - No one can control what can be transferred in blockchain and no one can edit any data due to immutability, thus making it censorship-free
- Universally Truthful - Once your transaction is successful it is now embedded in the state of the whole network, which also happens to be immutable, thus it is there forever.
- Corruption-Less - This goes hand in hand with the concept of trustlessness, we know math is not corrupt, right? Yesser!
Well, let's now see how Ethereum as a blockchain technology adds to that.
Why do we need Ethereum?
In 2015, Bitcoin was the only successful blockchain protocol, but it only supported simple transactions like sending/receiving bitcoin(token) to/from someone. But, Vitalik saw the potential of blockchain technology in how it can support smart contracts and run actual codes. He then built out Ethereum. (These intelligent people bruh!)
Smart Contract - Smart Contracts are similar to real-world regular contracts, except it is now embedded in the state(condition) of a global database and depends on the code to run. In short, a smart contract is a piece of code.
Imagine this, there is a code running all over the network continuously hearing for inputs and events, seems pretty much similar to the web2 right? But now, there isn't someone owning the server these codes are running, no individual entity approving the transaction, just some logic and math running in itself to do stuff. (Almost like magic! 🪄)
Let's learn from an example, suppose your friend took 1 ETH (native-currency of Ethereum), and then he promises to return it to you after a month. So, you both sign a contract for that, but what if your friend lost the contract and said there was no promise from me to pay. Here, smart contracts come as a life-saver. It won't be lost, it can't be edited or it can't be manipulated. It can transact 1 ETH from your friend to you directly as he signed the smart contract earlier. 😜
Ethereum Blockchain's aim and vision are to make network interactions decentralized and transparent, and not only performing boring transactions but also running logical codes for better functionality!
I hope that makes sense.🤗
But that's not everything to it! We have some awesome stuff coming up as there's a lot to discuss!
We haven't yet discussed how all of this is achieved at such a big scale and with high accuracy! (TIP:- EVM is the real hero)
We are going to discuss more in a coming blog, but until then make sure you have grabbed the ideas we have talked about so far!
Don't forget to write your views down below!
Thanks for reading! And, I'll catch you in the next one!