What Makes Ethereum?
Ethereum is a generalized blockchain for smart contract development. Developers working with Ethereum could build the next version of the internet, which will have the following characteristics:
money and payments are built-in
users can own their data, without applications that spy and steal
everyone has access to an open financial system
built on neutral, open-access infrastructure, controlled by no company or person
Ethereum has a native cryptocurrency called Ether (ETH). ETH is purely digital money, and can be sent to anyone, anywhere in the world, instantly. The supply of ETH isn’t controlled by any government or company - it is decentralized, and it is scarce. People all over the world use ETH to make payments, as a store of value, or as collateral.
But unlike other blockchains, Ethereum can do much more. Ethereum is programmable, which means that developers can use it to build new kinds of applications.
A program that runs on the Ethereum blockchain is called a smart contract. It is a collection of functions and data that resides on the Ethereum blockchain as code and state.
Smart contracts are public on the blockchain and can be thought of as open APIs. APIs that can invoke a function or read some data. In addition to being open, they are permissionless. This means that anyone can write a smart contract, deploy it to the Ethereum blockchain and have it accessed by anyone that has an internet connection. To send a smart contract to Ethereum, you would be changing the state of the Ethereum blockchain. This means that you need to pay a transaction fee so the smart contract can be added to the state of the blockchain.
These decentralized applications (or dapps) gain the benefits of cryptocurrency and blockchain technology. The applications can be trustworthy, meaning that once they are “uploaded” to Ethereum, they will always run as programmed. They can control digital assets in order to create new kinds of financial applications. They can be decentralized, meaning that no single entity or person controls them.
Right now, thousands of developers all over the world are building applications on Ethereum, and inventing new kinds of applications, many of which can be used today. Amongst these are:
cryptocurrency wallets that allow you to make cheap, instant payments with ETH or other assets
financial applications with which you can borrow, lend, or invest your digital assets
decentralized markets which enable you to trade digital assets, or even “predictions” about real-world events