Ether is a familiar word, even if it is not in the above mentioned context. Certain organic compounds are called Ether in science. It also refers to the term „etherial oils“. But Ethereum refers more to the „Ether“ of physics. Here, it is a construct for describing the vacuum of the universe. Philosopher René Descartes, a pioneer of rationalism, was the first one to describe „Ether“. „Ether“ served as a hypothesis in order to describe how waves, especially light waves, are basically able to spread out in a seemingly room of void like the universe. The aspect of its ability to spread might have inspired Ethereum´s inventer Vitalik Buterin in 2013, to name his concept after this existing, however, not concrete construct. Since Ether is not concrete as well and is supposed to enable information to spread across the internet.
Back then, Buterin described the concept Ethereum in a White Paper for the first time. This concept was adapted by Dr. Gavin Wood who eventually published a Yellow Paper in April, 2014. At this time, Ethereum was initially described as „the new Bitcoin“. The first Live Blockchain was launched as part of the Frontier Release (Ethereum 1.0) in July, 2015. Prior to this event, a 42-days long crowdsale campaign collected Bitcoins worth of more than 18 million dollars. Finally, more than 60 million ether were paid to the crowd. At the moment (March 2016), Ethereum is still in version 1.0 which is a test version directing to developers. The release of the second version Homestead was announced for March 16th.
ETHEREUM – HOW DOES IT WORK?
Nowadays, at times of the world wide web, this is not a problem. Igor pulls out his smartphone and opens an established navigation application. This application transmits his data of location and destination to the server of the application´s provider. The server figures out the fastet way to Igor´s destination and delivers the result to Igor´s smartphone. Just like that? Nah! Of course not! By now, each responsible user of the internet should be aware of the fact, that companies do not deliver their services to the customer for free. Igor pays with his data. The company knows who he is, where he is at the moment and can conclude from his destination that he is a huge Justin Bieber fan. Theoretically, the company is even able to suggest Igor a longer route, in order to guide him to stores of exclusive advertising partners.
In this case, the calculation of the route and the actual supererogation of the Application takes place centrally on a server of the company. The server can be manipulated, either externally or internally, and can crash as a worst case scenario. If Igor lived in a country with a government which did not want him to use this Application, he probably would never be able to get tot he Justin Bieber Concert and therefore be heavy at heart until the end of time. This is where the de-centrality of Ethereum comes in. For Igor, however, the de-centrality is encapsulated and therefore for him, the navigation works just like in the first scenario. He pulls out his smartphone and transfers his position and target data in the Ethereum. Instead of paying with his data, he pays with ether at this point which goes into the network. Within the network, there are numerous single computers which add up to one world computer, unlike Goo… uhm a fictional company´s single server. All users installed the „Mist Programme“ which is necessary for Ethereum as it serves as a so called gate to the network. Now Igor´s assigned task is distributed to several computers. In our example, the computers of Andi, Henry and Phil are each working on a part of the route´s calculation. The results are being added up and the fastest route is delivered to Igor´s smartphone at the end. So why do Andi, Henry and Phil participate? Because of the smart ecosystem. The three of them receive some of the ether paid by Igor, in order to compensate the operating costs for like energy and internet access. Andi, Henry and Phil can now use the Ether themselves for applications. However, they can also sell the Ether to people who want to use apps or speculate with ether at crypto markets.
The combination of the blockchain with the decentral computers also solves the problems which occured at the company. If one computer fails, another one will simply be used. Due to its safety precaution, the blockchain prevents manipulation. And thanks to the Ether, a transparent „business cycle“ takes place. This way, everyone is happy and Igor can have a good time at the concert.