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Ethereum Blockchain Development | Introduction

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The main idea of Ethereum is not only just a payment system but also building additional logic that allows us to implement our own needs in the blockchain system.

In this collection of articles, I am going to shed some light on Ethereum blockchain development. These articles will be targeted to the audience that knows what blockchain is about and would like to dive deeper into the development topic.


Why Ethereum


Ethereum, as well as Bitcoin and tons of other cryptocurrencies, at first sight, is just a blockchain-based system that provides us a decentralized payment system for our needs. So why it is so different?

The main idea of Ethereum is not only just a payment system but also building additional logic that allows us to implement our own needs in the blockchain system.

In Ethereum it is done by Ethereum Virtual Machine (EVM) that can execute code in the Ethereum network written on a specific language called Solidity. The programs created with Solidity in a blockchain network are called Smart Contracts.


Usage


For a better understanding of possible usage of Smart Contracts, let’s take a look at the most common examples working in the real world.

The most beneficial Blockchain application is creating an absolutely clear and honest third party, in any kind of transactions. It is possible because once Smart Contract is deployed to the network it cannot be changed due to the logic of the Blockchain system. To put it another way, it is just a possibility to change someone's virtual stuff without possible loss or deception.

More specific examples of such usage are well known as ICOs.

The idea is simple, let’s imagine building ICO without blockchain.

So it can be called a big deal with some roles, specific roles are 

1. Investor

2. Company

So the company says something like “Give us your money, and then we will do some business to raise it and give back the dividends”. That is basically how all investment works. But in most cases, any ICO has some restrictions, for example: if the Company cannot raise enough resources (usually called Soft Cap) then it has to give money back to all investors. Or, profit will be shared among everyone according to investment. Or, whatever else. To conclude all the above, one word - Promises.

The Company is promising to its investors that everything will be alright but it looks like a silly investment because no company can be fully trusted. 

And that is exactly the problem that can be fixed with Smart Contracts.

Now, take a look at the solution. The company can start an ICO on blockchain for example on the Ethereum platform. In simple words, a Smart contract will do the next things. All money accumulated will be stored in the form of Ether on the Smart Contract address. Also, except for all the needed functionality for moving and receiving money, there will be few options in the code.

  1. Contract logic will implement a function that will be active after the Company deadline for gathering money passed. And if Soft Cap is NOT reached, any investor will be able to call this function that will send all the funds back to investors and there will be no way of doing something else with this money.

  2. When the time for sharing profit comes, a formula that is predefined from the creation of Smart Contract will calculate the amount of profit for each investor and the predefined function will send it to them, so now we avoided the problem with cheating on profit sharing.

The general idea of the solution is: everyone who has a device with an internet connection can see the Contract code, state at any time from the beginning and decide is it worth to invest in such a project. Investors now have all the information in their hands.

The next example of using Smart Contracts in real life is not so hyped and profitable but also an extremely important thing. It is charity. Probably mostly all of us at least once in a while are providing some resources for charity. It starts by giving some coins to the homeless and ends with providing money for building roads and schools in poor countries. And in light of this, in the case of homelessness, you always know that your money goes where they were addressed you almost never know where your money goes in case of far poor countries.


What can blockchain give us in this case? 


Smart contracts will give us the possibility to make the next logic - it will be just an example of the working system and can be developed differently.

Also let’s define the goal, for example, to build a school in the middle of nowhere in a poor country. 

Let's start from gathering, so the Smart Contract can wait until the needed amount of resources is collected and then transfer this all to building company in some country. As a result, we have no middleman who could steal the money. And the only problem is that so far we, unfortunately, do not have developed enough blockchain community to buy bricks, chairs, tables, etc automatically with crypto. But it has to be fixed. 

Another example is the sale of shares of companies. In this case, the sale can become not only safer but also much faster and comfortable.

For now, buying shares of companies, it is difficult to work on exchanges. In most cases, people need some assistants brokers, etc to successfully operate with it. Moreover, usually big well-known companies sell their shares only to investors who are ready to put lots of money into it. 

With the help of Smart Contracts it is possible to make the next way:

Make tokens from shares and give the possibility to buy tokens for everybody. This way if Smart Contract is built up correctly the size of investment will not impact anymore because any investor will be able to buy shares quickly without tons of paperwork and time. 

And again, it will be safe because of the predefined logic of dividends set from the beginning.

In conclusion, I will say that it is possible to find a significant amount of other Smart Contracts usages. What makes this technology definitely worth learning. 




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