Cryptocurrencies: An Introduction to the Ethereum Blockchain


Table of Contents

The world computer needs money. “World computer” means Ethereum, but to understand this sentence it is better to start with money: Ethereum – just like Bitcoin and numerous other cryptocurrencies – should manage money on the Internet in such a way that everyone can participate, but not a bank or state monitors transactions and currency developments. How does it work without chaos breaking out?

Traditionally, cash balances are managed through cash books. This concept has a long history behind it; In Europe, notched sticks were already used in the early Middle Ages to document debts, among other things. The fundamental idea of ​​ancient and modern account management is quickly explained: You don’t record the account balances, but the transactions between different accounts and people. If the cash book is complete and tamper-proof, then you always know exactly who owns or owes how much money.

The blockchain of a cryptocurrency is nothing more than such a cash book (English: “ledger”), which is distributed globally: Every participant has a copy of the book. This is why blockchains are also called “distributed ledgers”.

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