What is Ethereum?


According to the Ethereum Foundation,

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.

These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.

Based on the above descriptions, Ethereum is an open-source blockchain-based decentralized platform featuring smart contracts.  Indeed, Ethereum is a programmable blockchain that enables developers to build and deploy decentralized applications. Rather than providing users with a set of predefined applications like bitcoin, Ethereum allows users to create any kind of applications they wish. In this way, it serves as a platform for many different types of decentralized blockchain applications, including but not limited to cryptocurrencies.

At the core of it is the Ethereum Virtual Machine (“EVM”), which can execute code of arbitrary algorithmic complexity. In computer science terms, Ethereum is “Turing complete”, which means It enables anyone to run any program, regardless of the programming language given enough time and memory.  Some of the commonly used programming languages for creating the decentralized applications are JavaScript, Java, Python and more. In addition, the default scripting language for writing the smart contracts is Solidity.

The Ethereum Virtual Machine 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. Cryptokitties is one of the most well known decentralized applications (dapps) among the many dapps developed so far. You can check out many interesting dapps at https://www.dapp.com/.  I have also developed a prototype dapp that I named it Kittychain Shop where the user can adopt a kitty, as shown in the figure below.

Ethereum runs on a distributed public blockchain network. Each and every node connected to the Ethereum network helps to maintain and update the blockchain database. The nodes of the network run the EVM and executes the instructions according to the smart contracts.   Ethereum node runs the EVM in order to maintain consensus across the blockchain. Similar to Bitcoin, Ethereum peers achieve consensus via the proof of work algorithm. However, they are planning to shift to the proof of stake algorithm in near future to improve scalability. The consensus gives Ethereum a high level of fault tolerance, ensures zero downtime, and makes data stored on the blockchain immutable and secure.

Like Bitcoin, Ethereum allows individuals to exchange cash without involving any middlemen like financial institutions, banks, or governments. However, Ethereum is more than just cryptocurrency. Beyond financial applications, we can create applications where trust, security, and permanence are considered important. Among the potential applications are asset registries, voting, governance, Internet of things, supply chain management and more.

Similar to Bitcoin, we can also carry out mining activity in Ethereum. However, In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn Ether, the default currency of Ethereum. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network. For example, the user needs to pay for acquiring a crypto asset in a dapps marketplace using Ether.


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