Ethereum (ETH)


Ethereum (ETH)

What is Ethereum?


Ethereum is an open-source blockchain-based platform that creates and shares business, financial services, and entertainment applications. Ethereum is a decentralized platform that runs smart contracts: applications that run as programmed agreements without any possibility of downtime, censorship, fraud, or third-party interference.

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 (futures contract), and many other things that have not been invented yet, all without a middleman risk.

Ethereum first appeared in 2015. It was first seen as a “decentralized platform“, where developers could develop decentralized applications on the blockchain, which is a global ledger for cryptocurrencies. The Ethereum cryptocurrency can be transferred or used as an investment and can also execute contracts. Ethereum has been popular with investors, but it has been criticized for its high gas fee and for not being scalable enough to manage an increasing amount of transactions.


Ethereum, as a cryptocurrency and platform, was first proposed by Vitalik Buterin in 2013. One of the main complaints about the bitcoin model is it unnecessarily consumes energy, and Ethereum aims to function using just enough electricity to keep it running. Ethereum was first publicly accessible on the 30th of July 2015.

It was developed with a focus on programming, that is why it is open-source software. The Ethereum system has been programmed to be “unstoppable” and “immutable”. Ethereum saw a rise in popularity with investors during 2017 when cryptocurrency started becoming more mainstream.

The Ethereum project was bootstrapped via an ether presale in August 2014 by fans all around the world. It was further developed by Ethereum Foundation, a Swiss nonprofit, with contributions from great minds across the globe. On July 30, 2015, the first release of Ethereum (“Olympic“) was announced to the public. The system went live on July 30th, 2015.

Use Cases

Ethereum comes with a range of use cases such as it acts as a solution that cuts out the middleman in a variety of industries such as real estate, voting, and more. It can be used as a way to transfer money, without any form of third-party interference, ensuring that fund movement are transparent. There is also a chance for it to be used as an incentive structure. Here are a few other potential use cases of Ethereum:

  • The most well-known use case of Ethereum is the creation of decentralized applications and/or smart contracts. This was what first started getting people excited about the cryptocurrency, due to its lack of interference, transparency and meaningfulness.
  • A decentralized organization or a distributed autonomous company (DAC) where members of the voting public can come together to create a company that is censorship free and bound by transparent governance.
  • Voting, as there would be no interference from any third party involved. It could also be used to verify documents in an immutable fashion.
  • A peer-to-peer ether marketplace, where goods and services can be exchanged without any form of third party.
  • A domain name system that is not restricted by borders.


The Ethereum blockchain can be alternately described as a blockchain with a built-in programming language, or as a consensus-based globally executed virtual machine. The part of the protocol that actually handles internal state and computation is referred to as the Ethereum Virtual Machine (EVM). That means every single node in the network runs the EVM – thus being a Turing-complete computer, and nodes reach consensus for the outcome of EVM operations (including transaction ordering and script execution).

The Ethereum blockchain records state transitions in a general-purpose database scheme called Merkle Patricia Trees. The state is represented by key-value pairs, where the keys are the unique account addresses and values are the balances of ether.

Ether is the “fuel” for the Ethereum Network, which means it’s transferred between accounts and spent on different transactions. Every single transaction costs a small fee depending on the current Ethereum price to make a transaction across the network. The sender of a transaction pays for the fees. Spending ether creates a message call to the EVM that describes which function should be called and what input parameters that function needs. In other words, it’s an executable program when you boil Ethereum down to its essence.

Ether is a necessary element for operating the distributed application software platform we know as Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications and that the network remains healthy (people are compensated for their contributed resources).

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