Ethereum and Ethereum tokens

The Ethereum makes the process of creating blockchain applications much easier and efficient than ever before. Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of potentially thousands of different applications all on one platform.

Smart Contracts

Smart Contracts are how things get done in the Ethereum ecosystem. When someone wants to get a particular task done in Ethereum they initiate a smart contract with one or more people. Smart contracts are a series of instructions, written using the programming language "solidity", which work on the basic of the IFTTT logic aka the IF-THIS-THEN-THAT logic. Basically, if the first set of instructions are done then execute the next function and after that the next and keep on repeating until you reach the end of the contact.

Example case: Buying something from a vending machine in Ethereum network:

Step 1: You give the vending machine some money and this gets recorded by all the nodes in Ethereum network and the transaction gets updated in the ledger. 

Step 2: You punch in the button corresponding to the item that you want and record of that gets updated in the Ethereum network and the ledger. 

Step 3: The item comes out and you collect it and this gets recorded by all the nodes and ledger

Every transaction that you do through the smart contracts will get recorded and updated by the network. What this does is that it keeps everyone involved with the contract accountable for their actions. It takes away human malice by making any action taken visible to the entire network. But, having said that, what mainly incentivizes these people to fulfill their end of the bargain anyway. What are they getting by helping out the requesters? This is where Ether comes in.

Ether

Every single step in a smart contract is a transaction or a complex computation and would have a cost that is measured in "gas". The price of this gas is paid by the requester in "Ether". Ether is the currency with which everything run in the Ethereum. When people talk about ETH and ETC they are actually taking about the value of the Ether in their respective blockchain.


What is an Ethereum Token:

The primary difference between Ethererum and any other cryptocurrency is that isn't just a currency, it's a environment. Here anyone can take advantage of the blockchain technology to build their own projects and DAPP through smart contracts. This is a very important distinction because this very thing shows you the true scope of what is possible in Ethereum.

Think of Ethereum like the internet and all the DAPPs as websites that run in it. There is something really about these DAPPs, they are all decentralized and not owned by an invididual, they are owned by people. The way that happens usually by a crowd-sale called the "ICO". Basically, you buy certain tokens of this DAPP in exchange of your ether.


These tokens are usually of 2 varieties:
Usage Tokens.
Work Tokens.

Usage Tokens: These are the tokens that act like native currency in their respective DAPPS. Golem is a pretty good example of this. If you want to use the services in Golem then you will need to pay with Golem Network Token (GNT). While these tokens have monetary value they won’t give you any particular rights or privilege within the network itself.

Work Token: These are the tokens that identify you as a sort of shareholder in the DAPP. Because of that, you have a say in the direction that that DAPP takes. A perfect example of this is the DAO tokens. If you were a DAO token holder then you had the right to vote on whether a particular DAPP could get funding from the DAO or not.

https://blockgeeks.com/guides/ethereum-token/

Step 2: You punch in the button corresponding to the item that you want and record of that gets updated in the Ethereum network and the ledger. -> why not only update in the ledger, what was updated in the Ethereum network.