What is Ethereum?

We now have a better understanding of one of the original design goals of Ethereum. With that in mind, we're now going to continue and start talking about exactly what Ethereum is and how we work with it. This is going to be our first description of many of the Ethereum system, and I say the first of many, because this is going to be kind of a primitive, basic description of Ethereum. And as we go throughout the course, we're going to come back and address more and more complicated topics in the Ethereum ecosystem. So again, this is our first taste and we're going to come back again and again and freshen up or kind of sharpen our understanding of different pieces of this puzzle. So let's take a look at this diagram right here. It's kind of a complicated diagram, but I want to focus on some of these notes I have off to the right hand side. We're going to talk about each of these nodes starting at the top and working our way down to the bottom. And I'm going to do my best not to just read the text on here. They're kind of prompts, and I'm going to discuss further about each of them. So the first thing we need to understand is that when we work with Ethereum, we are working with a network of computers. These networks are used to transfer money between different parties like you and me, and they're also used to store data. The transfer of money and the storage of data are what allows us to create interesting applications, which remember is the entire goal of Ethereum. The second thing to understand is that there are many different Ethereum networks. When you read about Ethereum in the news, you usually hear about, Oh, the price of ether coins is so-and-so dollars, or you might hear about deploying apps to the Ethereum blockchain or the Ethereum network. In reality, there's one main Ethereum network that everyone uses for the deployment of production applications, and it's where ether coins are actually worth US dollars or real money, I should say. However, there are many other Ethereum networks out there. There are test networks, so networks that are used solely for testing code and testing transactions. You can even create your own private Ethereum network on your own computer that is restricted to just you. Or you can make your own network and open it to other people as well. The point is that there's not just one Ethereum network out there. There's many. And even in this course, we will be creating our own little network. Next, networks are formed by one or more nodes, and this goes coupled with the next node note on here. A node is a machine that is running an Ethereum client. When I say machine, I'm talking about a desktop or a laptop or any type of computer, really. So we take a node, we install some software on it, we run that software, and then it connects to an Ethereum network and starts becoming a part of the network overall. All these networks connect or seem. All these nodes connect together to form the actual network. Next, anyone can run a node. So there's not just some specific set of people out there or important companies who run nodes on the real Ethereum network. No, anyone can create one. You can create a node. I can create a node. All we have to do is turn on our laptop, download this client software and run it and boom, we have a locally hosted node. Each node that we create, or I should say each node on the network has a full and separate copy of the blockchain. We haven't talked about the blockchain too much just yet, but that will be a huge topic of discussion throughout the course. So right now, let me give you a very basic description of the blockchain. We're going to say for right now that we can think of the blockchain as being like a database that stores a record of every movement of money between different parties. And it's also where we store data. Again, the key thing to keep in mind here is that the blockchain can be considered to be a simple database and nothing else. All right. So that's our first taste of what an Ethereum network is. Again, I just want to throw some of these very basic descriptions and definitions out there, and it's going to help ground us throughout the next task that we're going to go through. So let's pause right here. We're going to continue the next video and we're going to start getting our hands dirty in that next section. So I'll see you in just a minute.