Let’s introduce now the Ethereum blockchain, and we will see how, starting with a blockchain IT infrastructure, it can go far beyond simple currency transactions.

Even in the case of Ethereum, all transactions carried out over a given period of time are “bundled” in encrypted code blocks and forever registered on a public register.

Each new code block must be validated by a large number of users participating in the Ethereum network to have the “pass” for the public log.

This ensures that no one, in a fraudulent manner, writes malicious code to the network because it would not be validated by the total of nodes.

To run the Ethereum’s network, it needs that many computers of its network share a part of their computing power. Computers participating in the Ethereum network need “energy” (gas) for their operation. But how transactions take place and how is gas consumption recognized?

Well, for this purpose a specific crypto currency was created, called Ether. Ether is the digital currency that allows you to enjoy the Ethereum platform and allows you to move the Smart Contracts (now we see it!).

As we have seen, blockchain is not an invention of Ethereum but already exists for other digital coins like Bitcoin and many more. But, talking about Ethereum, there is a small, big difference.

Bitcoin blockchain and other digital coins only serve to secure currency exchange, but Ethereum’s blockchain goes further.

It is used to run programs called “Smart Contract” that allow you to have financial transactions, but these are only performed if certain conditions are met.

This concept is not immediately intuitive and here is a practical example.

Suppose that you go to a travel agency for a short vacation and ask for a full package of travel and stay at the hotel.

When making a reservation, you pay a part, for example 50% of the travel amount. What are the hidden dangers for you and the agency?

The trip may not be in accordance with what has been established or there may be extra non-agreed costs.

From the Travel Agency’s point of view, you may not have the money to pay the the remaining 50% or you may be causing damage to the site that hosts you.

Is there a guarantee to prevent these risks? No. You can only trust the Travel Agent and him of you

Now imagine this other scene.

Enter the agency and there is an APP that runs on Ethereum that activates a “Smart Contract” that regulates the purchase of an “all inclusive” trip. Therefore, it states, for example:

  1. Shortly after arriving at the chosen destination, a certain amount of money will be blocked;
  2. Automatically unlocks the amount of money that passes from your account to that of the agency only if everything contractually provided is done smoothly;
  3. If you incur a damages, a penalty is applied and then a further withdrawal from a guarantee fund that you are required to pay for the subscription;

In this case, it is the smart contract to be a guarantor, both for the customer who pays only if he actually arrives at his destination and benefits from all that is required, both for the travel agent who will not have trouble getting the money.

And this is just one of the many examples of practical application of this technology.