1. Basic concepts
1. What is Ethereum?
Ethereum is the community-driven technology that powers the cryptocurrency Ether (ETH) and thousands of decentralized applications.
Banking for everyone |
In real life, not everyone has access to financial services. But as long as you have an internet connection, you can access ethereum-based lending and savings products. |
better privacy protection |
You don't need to provide all private information to use Ethereum applications. Ethereum's economic system is built on value, not regulation. |
P2P network |
Ethereum allows you to skip the middleman and transfer assets or enter into agreements directly with anyone. |
anti-censorship |
No government or corporation has control over Ethereum. Decentralization guarantees your freedom to use Ethereum. |
business guarantee |
Ethereum creates a more level playing field. Customers have built-in security, as long as they provide sufficient quality and quantity of products, they can get corresponding compensation. The influence of a large company is not a prerequisite for business success. |
win-win |
Good compatibility makes Ethereum-based products always have good product design and user experience. Every company can build its own success on the basis of other products. |
Ethereum 101
Ethereum is a technology for sending cryptocurrency to anyone by paying a small fee. It also enables the creation of applications that are never down and available to everyone.
It is a programmable blockchain that belongs to the whole world.
Ethereum builds on the innovations brought about by Bitcoin, while making many improvements.
While both allow you to spend digital currencies without the backing of a payment service provider or bank, Ethereum is programmable so you can build other different digital assets on top of it – even Bitcoin!
So Ethereum is not just about payments. It is also a free marketplace of financial services, games and applications. No one can monitor or steal your data here.
2. What is Ethereum (ETH)?
ETH is a cryptocurrency. This is scarce digital currency that you can spend on the internet - similar to bitcoin. If you are a new user, click here to learn how ETH is different from traditional money.
3. What is an Ethereum wallet?
An Ethereum wallet is a tool that helps you interact with your Ethereum account. Think of it like an internet banking app with no bank behind it. Through the wallet you can check your balance, send transactions or link to various applications.
4. What is a smart contract?
Smart contracts digitize agreements by converting their terms into computer code, automatically executing when the terms of the contract are met.
eg：
digital vending machine
A simple analogy for a smart contract is a vending machine, which works somewhat like a smart contract - a specific input guarantees a predetermined output.
- you choose the product
- Vending machine returns the amount required to purchase the product
- you inserted the correct amount
- The vending machine verifies that you have entered the correct amount
- Vending machines dispense selected products
The vending machine will dispense your desired product only after all requirements are met. If you don't choose a product or put in enough money, the vending machine won't give you your product.
5. What is blockchain?
The best way to describe a blockchain is as a public database that is updated and shared by many computers in a network.
"Blocking" means that data and state are stored in sequential batches or "blocks". If you send ETH to someone else, the transaction data needs to be added to a block to be considered successful.
"Chain" refers to each block cryptographically referencing its parent block. In other words, blocks are chained together. The data in a block cannot be changed without changing all subsequent blocks, but changing subsequent blocks requires the consensus of the entire network.
6. What is a decentralized application?
It is an open public decentralized platform that no one person or group can control.
7. What is the difference between WEB2 and WEB3?
Web2 refers to the version of the Internet as we know it today. An Internet that provides services under the control of Internet companies in exchange for personal data. In the case of Ethereum, Web3 refers to decentralized applications running on the blockchain. Any user can participate in these applications on Ethereum, but personal data will not be sold.
8. What is decentralized finance?
DeFi is an umbrella term for financial products and services that can be accessed by anyone with access to Ethereum (with an internet connection). With DeFi, the market is always open and there is no centralized authority that can block payments or deny access to anything. Instead of slow services that were previously subject to human error, they are handled automatically and securely by code that anyone can inspect and review.
It's a thriving crypto economy where you can lend, borrow, go long/short, earn interest, and more. Crypto-savvy Argentines have used DeFi to escape severe inflation. Companies have already started paying employees wages in real time. Some have taken out or repaid loans worth millions of dollars without even requiring any personal identification.
Compared
| DeFi decentralized finance | traditional finance |
|---|---|
| You hold your money. | Funds are held by institutions. |
| You control where your money goes and how it is used. | You must trust the institution not to mismanage funds, such as lending to risky borrowers. |
| Fund transfers are completed within minutes. | Payments may take several days if processed manually. |
| Anonymous transactions. | Financial activity is closely tied to who you are. |
| Open to anyone. | You must apply to use financial services. |
| 24 hours non-stop trading | Set up the trading time according to the working hours. |
| Built on a foundation of transparency - anyone can view product data and check system health | Financial institutions work behind closed doors: you can't ask to see their loan history, records of assets under management, etc. |
9. What is a non-fungible token (NFT)?
NFTs are tokens we use to represent ownership of unique items. NFTs allow us to tokenize items such as art, collectibles, and even real estate. They have only one official owner at a time, and are protected by the Ethereum blockchain - no one can modify ownership records or copy-paste a new one based on an existing NFT.
NFT stands for non-fungible token. Inhomogeneity is an economic term you can use to describe things like furniture, song files, or your computer. These items are not interchangeable with other items as they have unique properties.
Homogeneous items, on the other hand, are interchangeable based on their value rather than unique attributes. For example, ETH or USD has fungibility properties because 1 ETH/1 USD can be exchanged for another 1 ETH/1 USD.