CNBC Video
Ethereum Intro and Smart Contacts
Ethereum Intro
ETH (Ether) is a cryptocurrency that runs on Ethereum's network and is used to pay for the computational resources and transaction fees on the Ethereum Network. It is more aptly a fuel of the network, since it tracks computational resources for, and facilitates all transactions on the network.
Ether tokens are used for buying computing power (for decentralised applications etc) on the network. So a developer might pay Ether tokens for his dapp is hosted on the network, and a user would have to pay Ether tokens for using the service.
Ether is also used to pay for gas, which is used to run processes and make transactions, basically make compuatations.
Investopedia article on Gas
Gas refers to the fee required to successfully conduct an transaction or execute a smart contract on the Ethereum blockchain. It is priced in small fractions of ETH, and is used to allocate resources of the Ethereum Virtual Machine so that dapps can self-execute.
The concept of gas is handy to maintain a distinct value layer that solely indicates computational expenses, and allows for the practical separation of cost of the transaction or service (say 50 ETH) from the computational cost of this trans/service (say 0.001 ETH).
Ethereum miners, who validate transactions on the network, are awarded this fee in return for their computational services. The price of gas fluctuates with supply and demand of computational power (aka no. of miners).
Smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are met.
They are typically used to automate the execution of an agreement, so that all the participants can be certain of the outcome without involving an intermediary. They are usuallu used to facilitate the exchange of money, shares, property, etc.
The transaction that occurs as a result of the smart contract is permanant and cannot be changed.
There can be as many stipulations (a condition or requirement that is demanded as part of an agreement) as needed to satisfy both the parties about the task being completed.
Ethereum.org Docs
Investopedia Article On dApps
A dapp has its backed code running on a decentralised peer to peer network. Thi is in contrsast to an App where the backend code is running on centralised servers.
Dapps are controlled by the logic of the smart contracts that make it, so smart contracts are like the backend of a dapp. Smart contracts live (permanantly) on the blockchain and do exactly as planned.