In July of 2014, a 19-year-old Russian-Canadian named Vitalik Buterin released a white paper called “Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform.” In it, Buterin proposed a new blockchain platform that would be more versatile than Bitcoin’s, allowing for the development of “decentralized applications” (dApps) and “smart contracts.”
Buterin had been involved in the Bitcoin community since 2011, and he was convinced that blockchain technology had much more potential than just serving as a digital currency. He believed that blockchain could be used to create decentralized versions of existing centralized services, such as financial institutions, social networks, and even governments.
However, Buterin realized that Bitcoin was not well-suited for this purpose. Bitcoin’s blockchain was designed primarily for one application: transferring value from one person to another.
While it could theoretically be used for other purposes, such as smart contracts, doing so would require significant changes to the underlying code. .
So Buterin decided to create a new blockchain platform that would be specifically designed for building decentralized applications. He named this platform Ethereum, after the element with the highest atomic number in the periodic table.
Ethereum’s key innovation is its use of “smart contracts.” A smart contract is a piece of code that can automatically execute certain actions when certain conditions are met.
For example, a smart contract could be used to automatically transfer ownership of a piece of property from one person to another when the deed is signed.
This may not sound like much, but smart contracts have the potential to revolutionize the way we interact with each other and with businesses. By automating repetitive and time-consuming tasks, they can save us a lot of time and money.
Furthermore, because they are stored on the blockchain, smart contracts are tamper-proof and cannot be modified or deleted by anyone – including the parties involved in the contract. This makes them much more reliable than traditional contracts, which are often written in ambiguous legal language and can be interpreted in different ways by different people.
Finally, because they are executed automatically, smart contracts can help to eliminate middlemen who often take a cut of our transactions (think real estate agents, banks, and PayPal). This makes transactions cheaper and more efficient.
All of these features make Ethereum an incredibly powerful platform with a wide range of potential applications. So it’s no wonder that Ethereum has been gaining popularity among developers and businesses alike.
Vitalik Buterin created Ethereum because he saw the potential for blockchain technology to do more than just serve as a digital currency. He believed that it could be used to create decentralized versions of existing centralized services – such as financial institutions, social networks, and even governments. And he was right! Ethereum’s smart contracts have the potential to revolutionize the way we interact with each other and with businesses.