Getting Started with Ethereum

Breaking down Ethereum– What, Why, How & Where?

What is Ethereum?

Ether is the cryptocurrency that powers the Ethereum network. It’s openly accessible, programmable, digital-money that is used to interact with thousands of applications that do not require special privileges. It’s built by a community so no central authority controls the direction of the network.

All you need to use the Ethereum network is a wallet and a bit of Ether. Having Ethereum in your wallet enables you to use the network.

Overview of the Ethereum Mainnet.

What’s a wallet?

This allows you to create transactions such as;

• Approving (allowing an app to use your balance)
• Minting (creating tokens)
• Transferring (gifting or sending)
• Swapping (exchanging)

These are just a few examples of different transactions on Ethereum. There are many other different types of transactions. They occur between addresses and smart contracts. Because the format of addresses on Ethereum is standard for everyone, the main way to tell if an address is a contract or not is whether or not it has any restrictions. Users of Ethereum can transfer between themselves with no restrictions. Smart contracts may have restrictions that prevent regular functions.

Interacting with the Ethereum Network.

A few things about addresses on Ethereum;

• All Ethereum addresses start with 0x.
• By default, all addresses on Ethereum are created as wallets with no restrictions & have all the permissions possible — inherited by the public network.
• Smart contracts — like a minting contract. Only have certain ‘programmable’ functions available to interact with.
• There is an address called 0x0000…0000 this address is used for minting/burning and is known as the genesis address. No one possesses the keys to this address. Anything sent to is ‘lost’. Anything coming from is ‘genesis’.
• Every address on the network has a public key that everyone can see and a private key that should only be possessed by the owner or in the case of multi-sig — owners.

With cryptocurrency, you have a public address and a corresponding private key for that address.

For example this address;

0x1b3cB81E51011b549d78bf720b0d924ac763A7C2

Has a private key and no one knows it but the owner. The public portion above allows everyone to see what the balance is and the transactions created but it doesn’t give anyone else access to the funds

Why does Ethereum benefit me?

Like Bitcoin, Ether is a cryptocurrency. But there’s a catch– It’s programmable. There are arguably many benefits to digital currency. They’re dynamic, easy to access, portable and secure.

Programmable currency like Ethereum fits all of the above categories but adds controls. The ability to program money creates an inexcusable instance of versatility. Never before have we been able to program a sale, reimbursement, sweepstake reward or corporate dividend payment in such an efficient and verifiable manner.

Sold something? Didn’t get paid? Lost ETH to someone?

• Check the etherscan tx and warn others of the scammer.
• Not enough: the transaction failed (You pay gas fee)
• Slippage: the swap failed (You pay gas fee)
• Complexity: out of gas (You pay gas fee)

Everything on Ethereum is connected through on-chain data.

Everything is publicly verifiable on the blockchain. Apps, users and services are all connected to the network with on-chain data. Everything on the network shares a common asset– Ethereum.

How do I use it?

Everyone needs Ether to transact on the Ethereum network. Because of this, it’s hard for one to guesstimate the best way to use it. Test-nets are available and allow you to interact with Ethereum without paying for anything. They are separate networks from the main.

Should you hold it? Spend it? or make it work for you?

Intuitively the answer is all of the above. Ethereum is fuel, needed for every transaction on the network. You can think of the network as the chief comptroller of the currency– Ether. However, the network has limited control over Ether itself. The best way to think of this is that the comptroller of currency can only verify that the currency is indeed Ethereum and it went from point A to B.

The comptroller tells you whether or not your transaction was successful. A record is left on the blockchain. All else produces an error and it’s as if you never spoke to the comptroller in the first place. According to everyone else that is. You merely paid for the entrance to the building even though you were denied access. It’s a surcharge for an attempt. Just like in the real world, you can spend money sometimes and fall short of your goal. Spend gas and not get to your destination.

Smart contracts can have conditions that need to be fulfilled in a certain way. This is like a signal to the comptroller, dictating what can and cannot be done with the address in question. Whether it is approving, minting, spending or transferring. Other people using Ethereum only have as much control as the network will allow and sometimes users have to follow conditions. And that goes for every person on the network unless specified in a smart contract.

Where can I use Ethereum right now?

As of now, there are thousands of applications built on top of Ethereum. Everything from financial services, domain style servicing, art & even games. DeFi — decentralized finance is a conglomerate of apps that are powered and ran by smart contracts on the Ethereum network. Because of the ability to program money and create rules with smart contracts, traditional and complex financial instruments are created on Ethereum in the form of user-friendly applications with a natural transparency.

Financial services are not the only use case. Collectibles on Ethereum created under a standard ERC-721/ERC-1115– different than ERC-20 establish unique NFTs or non-fungible tokens that can be used for a variety of things such as art, athletic cards, in-game items, certificates, badges, bonds etc.

Small overview of Dapps on the Ethereum Network

A few notable examples are;

• Aave (Aavesome)
• Compound
• Cryptokitties (CryptoKitties)
• Cryptopunks
• Ethereum Naming Service
• MakerDAO (MakerDAO)
• OpenSea (OpenSea)
• Rarible (Rarible) (How-to-guide coming soon!)
• Storj (Storj Labs)
• Uniswap

You can see more decentralized apps (dApps) built on Ethereum here. As well as many other platforms designed to aggregate the activity on the network like– Dapp Radar, DeFi Pulse, DeFi Prime & Etherscan.

Anything else I should know?

Ethereum is powerful and there are endless possibilities for the curious and the ambitious. Don’t be afraid to get your hands dirty and use Ethereum. There are test-nets so you can practice and learn. There are many tutorials around the web and above all a very active and giving community. Reach out!

TLDR; Tips & Takeaways

• Ether is the currency of the Ethereum Network
• All transactions require gas if they are on-chain
• Applications built on Ethereum use ETH as money/payment
• All addresses start with 0x
• The infamous ‘burn’ involves this address 0x0000…0000
• There are unlimited options for programmable money
• Being cheap with gas creates more chance for a stuck transaction
• If you need to use your wallet– you will need some ETH
• The price paid for a transaction fluctuates wildly (Gas Chart)
• Use test-nets if you have never used Ethereum before (Explainer)

Sources for learning more;

• Coindesk: Ethereum 101
• Ethereum Token Standards (ethereum)
• A Social Operating System (Stephan Tual)
• Ethereum’s Website
• Open Sea: NFT Bible
• The Crypto Art Industry: Loop News (Loop)
• Investopedia: Ethereum
• What’s a wallet?
• Find a Wallet: Choose what’s right for you (Read reviews!)