Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.
Ethereum is a programmable blockchain. It means that developers can build applications on Ethereum.
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 Ethereum blockchain tracks the state of every account, and all state transitions on the Ethereum blockchain are transfers of value and information between accounts.
All accounts have addresses which are used to send and receive transactions. Ethereum addresses are composed of the prefix “0x”, a common identifier for hexadecimal, concatenated with the rightmost 20 bytes of the Keccak-256 hash (big endian) of the ECDSA public key (the curve used is the so-called secp256k1, the same as Bitcoin).
In hexadecimal, 2 digits represent a byte, meaning addresses contain 40 hexadecimal digits. One example is 0xb794F5eA0ba39494cE839613fffBA74279579268, which represents the address for the contract representing the Ethereum Foundation treasury.
Accounts can be divided into two types: externally owned accounts (EOAs), and contract accounts. Both types of account can send transactions and have balance.
An externally owned account has an ECDSA public-private key pair associated with it and stores data about transaction sent from and to it. A contract account, on the other hand, doesn’t have its own private key pair; instead it has bytecode that is executed by the network to perform its functions.
Contracts are like autonomous agents living on the Ethereum network, able to send messages to each other as well as doing computations and storing data on the Ethereum Virtual Machine (EVM). Contracts are written in programming languages like Solidity or Vyper which can be compiled into bytecode that runs on Ethereum’s virtual machine.
The total supply of ETH is infinite because ETH is not a physical commodity like gold or oil which have a finite supply. The total supply of ETH comes from two sources: newly mined ETH and transaction fees collected by miners who confirm transactions on the Ethereum blockchain. The block reward paid to miners is 5 ETH per block plus transaction fees paid by senders.
The transaction fees go to miners who confirm transactions on the Ethereum blockchain and they vary depending on how congested the network is. When there are more transactions than can fit into one block, users are willing to pay higher fees in order for their transactions to be included in the next block mined by miners.
The total supply of ETH will increase over time as more blocks are mined and new ETH is created through mining rewards paid to miners. However, this increase in supply will happen at a decreasing rate because after every millionth block mined (approximately every 4 years), the block reward paid to miners will be reduced by 50%.
This reduction in mining rewards ensures thatETH issuance follows an inflationary schedule whereby approximately 18 million ETH will be mined every year for eternity until around 2140 when approximately 100 million ETH will have been mined in total.
As you can see, there is no set amount of ETH tokens because new ETH tokens are created through mining rewards paid to miners who confirm transactions on the Ethereum blockchain. The total supply of ETH will increase over time but at a decreasing rate until around 2140 when approximately 100 million ETH will have been mined in total.