What is Ethereum?


Understanding Ethereum and Ether

Ethereum is an open-source, public, blockchain-based, smart contract-based, decentralized and distributed computing system. The native cryptocurrency token on the Ethereum network is Ether (ETH).

The Ethereum network is first and foremost a blockchain-based distributed computing system compromised of Ethereum’s software and a peer-to-peer network consisting of those who run the software.

This Ethereum network acts as a platform for computer applications and has a native economy based around the cryptocurrency Ether (ETH).



Ethereum Overview

The Ethereum software utilizes its own programming language called Solidity.

That language is used create types of programs called smart contracts.

Smart contracts and transactions done by those contracts are executed by “the Ethereum Virtual Machine (EVM)” (a machine that executes the code) and stored on the Ethereum blockchain (a database protocol for securely storing data).

This computing system can be used to settle financial contracts like Bitcoin, but unlike Bitcoin it can also be used to create and host apps and more.

Anything done on the Ethereum network costs “Gas.” Gas is a fee paid in its native cryptocurrency Ether (ETH).

Ethereum is commonly used to create “tokens” like the native Ether (ETH) and ICO tokens like KIN or ZRX, to create and host decentralized apps or DApps (apps with their backend hosted on the Ethereum platform) like CryptoKitties and Decentralized Exchanges (DEXs), to create DAOs(Democratic Autonomous Organizations; i.e. decentralized companies/groups), to crowdfund those ICOs and DAOs, and to store and execute smart contracts (computer programs that execute when conditions are met).

In other words, Ethereum does a lot more than just host the cryptocurrency everyone trades ETH. Where Bitcoin is like a decentralized and distributed mix between PayPal and an online bank account, Ethereum is like that plus an operating system / programming language… and thus there is a little more to explain here than there is with a more focused cryptocurrency like Bitcoin.

The Decentralized Web: Many DAaps use websites for the front facing part that users interact with and the Ethereum network for the backend. Using websites to access DAaps is browsing the decentralized web. Check out MetaMask or Coinbase Wallet for examples.

Ethereum 2.0: One problem Ethereum had in 2017 was speed. Luckily, Ethereum is software and software can be updated. The plan to take Ethereum to the next step can very generally be called “Ethereum 2.0.”

ICO Drama Circa 2017 – 2018: ICOs got a bad reputation in 2017 – 2018 for a myriad of complex reasons (mostly having to do with a lack of quality control in some cases and the SEC in other cases). However, in that messy process Ethereum clearly proved its core ability to act as a platform to create DAOs, build a coin networks, and crowfund many projects at a rapid pace. In simple terms, Ethereum worked, works, and is working.

SEMANTICS: The key words here are “decentralized and distributed” (which means hosted on many computers with no central controlling power), “tokens” (which can represent a cryptocurrency or anything you can imagine a digital string of numbers and letters can represent ), “smart contracts” (digital contracts/programs which can do a wide range of things, including distribute coins or record transactions using blockchain technology), “blockchain” (a secure, encrypted, and sequential digital record of “blocks” of data), “DAO” (an organization bound by smart contracts rather than the enforcement of central figures), and “DApps” (Ethereum is a decentralized computing platform that can host “decentralized applications” AKA software).

Vitalik Buterin Explains it All: If you want definitions for everything from DApps to Smart contracts, check out the creator of Ethereum’s guide to Ethereum terms.

The Peoples’ Decentralized World Computer (An Ideal): Where Bitcoin and its blockchain are focused on creating and maintaining a record of a single cryptocurrency and its transactions, Ethereum is an open-source software platform based on blockchain technology that does much more than just house a cryptocurrency. Due to this, this page is a bit more in depth than other pages.

Ether Vs. Ethereum: “Ether,” which trades under the symbol ETH, is the name for the cryptocurrency token native to Ethereum’s “blockchain-based smart contract platform” (just like Bitcoin is the token native to what we could call Bitcoin’s “blockchain-based smart contract platform”). Meanwhile, there are a number of unique cryptocurrency tokens that use the Ethereum platform and can often be bought with / traded for Ether. These Ethereum-based tokens are called ERC-20 tokens and can be stored in a ERC-20 friendly Ethereum wallet like MyEtherWallet. About 1/2 of “ICOs” use Ethereum’s platform and are ERC-20 friendly tokens that can be stored in an Ethereum wallet alongside Ether.


FACT: With Ethereum you need to pay “gas” for transactions (AKA a transaction fee). Thus, you always need at least a little Ether in your wallet so “gas” (transaction fees) can be paid.


  1. Ethereum – Wikipedia
  2. Ethereum – Official Site
  3. Ethereum Token – Official Site

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