Ethereum was first described by Vitalik Buterin in 2013 in his white paper, and it was described as a “next-generation smart contract and decentralized application platform”. Ethereum has its native currency, called Ether, ticker symbol ETH, which has a market cap of around 140 billion dollars as of.
Ether is used both for transactions and used as currency to reward the miners for their work through transaction fees paid by the users and smart contracts. Per day, Ethereum processes more than one million transactions which are approximately four times more than Bitcoin.
It’s important to say that Ethereum is completely free to read, i.e. the blockchain is completely public, but it’s not free to write. To write on the blockchain any code, smart contract, data or transaction, payment in fees, also called gas, must be made. It’s kinda this: you can see who is at the party, you can hear what music are they listening too, but to enter the party you will have to pay!
Ethereum is also described as a second-generation blockchain (being Bitcoin-like blockchains, the first-generation), supporting first-time smart contracts and scripting functionality. Smart contracts allow a world of possibilities, and they can pretty much automate anything, being self-executing computer code that lives in a decentralized blockchain.
Once conditions on a smart contract are met, an event (whatever the smart contract was designed for), is triggered, fulfilling the smart contract’s purpose. In Ethereum, the smart contracts are written in a programming language called Solidity and these programs are run in the EVM – Ethereum Virtual Machine.
You can see the EVM as a giant Turing-complete, decentralized virtual machine that is distributed across all the Ethereum nodes, all around the world. In total, there are around 8500 nodes, and pretty much anyone can be a node in the network. The EVM is the core of smart contract execution.
Due to its decentralized nature, it’s also highly redundant, high fault-tolerant, and very resistant to attacks such as DDoS stacked and immutable. What’s the catch? The trade-off is that Ethereum may have a bit low throughput and/or the transaction fees may be high sometimes.
Each Ethereum node stores the state of the blockchain and every smart contract, contributing to the blockchain’s consensus mechanism. Ethereum’s consensus mechanism is current proof of work, but it’s planned to switch to proof of stake sometime soon.
The main difference between Bitcoin and Ethereum is that Ethereum can be seen as a supercomputer that runs a Turing-complete programing language, while Bitcoin can only be used to send transactions.
There are entire industries being built on top of Ethereum. Hundreds of ICOs raised billions of dollars. Many NFTs marketplaces buy and sell non-fungible tokens for art, collectibles, and cute crypto kitties.
Dozens of Defi platforms are running on Ethereum, building entire banks on the platform. Ethereum is a huge universe of possibilities, applications, and creativity.