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What Is Ethereum?

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2 min read

What Is Ethereum?

There’s no question about it, as far as technological advancement is concerned, we have left our ancestors in the dust. It’s almost comical to think about what someone from the 1800s might do if they woke up in this day and age. Ironically, many people today don’t know how this technology functions either. The truth of the matter is, most web-based applications aren’t in business to provide free services. Advanced analytics and catered advertising have made user data invaluable.

Which immediately leads you to ask the question, how does one continue to use the internet without forfeiting their personal information? This is precisely the problem that was being tackled by the creators of Ethereum, a radical new cryptocurrency created to decentralize the internet.


The idea for Ethereum was first conceived by a developer named Vitalik Buterin, who had been following Bitcoin for many years. He had been blogging about it in Bitcoin Magazine, often pondering on the improvements that could be made to this technology. Ultimately, what Buterin realized was the revolutionary capacity of blockchain ledgers; the underlying foundation for making Bitcoin decentralized, secure and transparent.

The key word to understand here is decentralized. What does this really mean?

This is all in reference to distributed databases, rather than a centralized database. Think of YouTube for a second. There are loads of data that Google must store on its servers all around the world. When you search for a video or click on something to play, Google is responsible for providing the right video through its massive database. This is known as a centralized structure. The major issue with this type of structure is that Google is the one central admin and also the one point of failure for hackers to get access to sensitive data.

A blockchain ledger is known to have a decentralized structure. Every participant has a continuously updated ledger of transactions where everyone’s personal information is hidden using cryptography.

This means that the transactions can get validated by consensus from all participants without exposing sensitive information so two parties can exchange data or digital assets without the need of a central admin, making it decentralized.

Ethereum is a blockchain platform. The most appealing part about it is the customizability of the transactions it can store. The Ethereum network has actually created a special language that allows anyone to set up an application on the network. This would work exactly the same as any application on your phone. The only difference being the way your data is stored is decentralized. Therefore, Ethereum allows the development of Decentralized Applications, or DApps, which play a very important part in the crypto world. Never heard of this term before? Check out our D’Apps article to learn about them!

For the first time, Ethereum provides the possibility of establishing a decentralized internet. What this means is that two parties could interact with each other in complex ways without having to surrender their sensitive information.


The revolutionary aspect of Ethereum lies in its ability to unleash the power of blockchain technology in all kinds of ways. From the distribution of music rights to creating a virtual marketplace, Ethereum has implications on nearly everything.
Ethereum has the unique capability of allowing complex functions to be coded and executed when a transaction is about to occur, these are known as Smart Contracts.

Suppose I want to buy a car. I can create a contract with a dealership and agree on an amount of Ether to be exchanged on predetermined dates. The clauses of this contract, like the preauthorized payments and any charge backs, can all be coded in Smart Contracts, which will be executed on the Ethereum blockchain. Since these networks are so secure and transparent, complex transactions can occur without the need of a central mediator. Therefore, Ethereum provides an already established blockchain framework which can be used by decentralized applications to execute complex functions via Smart Contracts.


As far as Ethereum is concerned, it exists for one major reason: to execute complex transactions in the form of Smart Contracts, which as discussed, are self-enforcing digital contracts. Let’s look at another example. Imagine I want to buy your house. We would have to go through a lengthy process of hiring all sorts of middlemen like lawyers and insurance brokers. Ultimately, we would have to get a lawyer to draft a contract, which both of us would sign to hold each other accountable to the deal.

A Smart Contract is like a diet version of a legal contract but without the need for any lawyers. Say the keys to the house you are trying to sell are accessible digitally. Using the Ethereum network, a Smart Contract could be executed with the following preconceived terms:

  • I get access to the keys to the house as long as Ether from my wallet is regularly being sent to the homeowner.
  • If my payment wallet lacks the required amount, then I get a notification on my phone to add funds, otherwise, the keys could automatically lock me out of the house. The contract could even charge me a partial amount and send me a notification for the pending balance.

What this allows is the employment of an autonomous agent over the blockchain network. An autonomous agent works without the interference of a human entity and functions over a distributed network, where all of its transactions can be easily monitored.


Understanding the broad applicability of blockchain technology is not enough for implementation. On its own, this technology is not easily accessible. However, by providing an already established network, Ethereum unleashes the power of blockchain by making it widely accessible. It’s extremely difficult for programmers to set up a blockchain network with robust standards of security and transparency from scratch, but with Ethereum, all they really have to do is create the application.

Bitcoin revealed the implications of blockchain technology on the financial scene, but Ethereum revealed its implications on most everything else. From preserving the rights of authors of digital assets to securely storing health records, the possibilities are truly endless.

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