When people talk about Ethereum, they are usually referring to the Ethereum blockchain and the associated cryptocurrency, ether. However, Ethereum is much more than just a digital currency.
It is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.
Ethereum was first proposed in 2013 by Vitalik Buterin, a then 19-year-old Bitcoin programmer. He was inspired by Bitcoin’s success, but believed that it was limited in its ability to do more than just act as a digital currency.
He proposed Ethereum as a way to use blockchain technology to create a decentralized platform that would go beyond simple financial transactions.
The Ethereum blockchain is similar to the Bitcoin blockchain in that it is a public, distributed ledger of all transactions that have taken place on the network. However, unlike Bitcoin, Ethereum can be used to build decentralized applications (dapps).
These dapps can be used for anything from creating a decentralized social network to tracking the provenance of diamonds.
The cryptocurrency associated with Ethereum is ether. Ether is used to pay for transaction fees and gas, which is a unit of computation used to power transactions on the network.
Ether can also be sent from one user to another as a form of payment.
Ethereum has often been referred to as “the world computer” because it allows anyone to create and run decentralized applications. This makes it an incredibly powerful tool with endless potential applications.
With Ethereum, we are only just beginning to scratch the surface of what is possible.