Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of 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. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.

The project was bootstrapped via an ether presale in August 2014 by fans all around the world. It is developed by the Ethereum Foundation, a Swiss non-profit, with contributions from great minds across the globe.

Ethereum is often described as a digital currency but here’s something important to remember: Ethereum is much more than that. Yes, Ether (the native token of Ethereum) can be traded like other cryptocurrencies but the real power of Ethereum lies in its ability to execute so-called smart contracts.

A smart contract is piece of code that can automatically execute an agreement between two parties. For example, let’s say you want to buy a house.

You could use a smart contract to exchange money (in Ether) for the title of the house. The contract would hold the money until you send proof that you have paid for the house and then it would release the money to the seller. No third party needed to mediate or enforce the contract!.

The same goes for many other agreements like wills, loans, employment contracts and so on. Smart contracts could even be used to create entire decentralized autonomous organizations (DAOs).

A DAO is basically a company that runs itself using smart contracts with no human involvement whatsoever. Decentralized exchanges, insurance providers and many other applications are being built on Ethereum as we speak.

Now, one important thing to note about Ethereum is that it is not just one blockchain but rather a network of many different blockchains, each one running its own version of Ethereum’s smart contract software. That might sound confusing but it’s actually quite simple: each blockchain in the network represents a so-called side chain.

A side chain is basically an independent blockchain that is connected to the main Ethereum blockchain through what is known as a two-way peg. This peg allows tokens (ether and/or ERC20 tokens) to be transferred from one blockchain to another while keeping track of their respective balances. In other words, it allows tokens to be moved from the main Ethereum blockchain to a side chain and back again if needed.

The two-way peg is achieved by locking up ETH on the main chain in a smart contract and then “unlocking” an equivalent amount on the side chain. This process is called “atomic swap” and it ensures that both chains remain in sync at all times.

The most popular side chain right now is probably Plasma, which was developed by some of Ethereum’s co-founders including Vitalik Buterin himself. Plasma is basically a framework that allows developers to build their own scalable side chains on top of Ethereum without having to worry about security or governance issues (since those are handled by the mainchain).

Several promising projects are already built on Plasma including OmiseGO, QuarkChain and Loopring. .

So does Ethereum have side chains? Yes, it does! And they are becoming increasingly popular as we speak.