What is Ethereum for Beginners?

In a digitally-connected era, the majority of people are already aware of Bitcoin’s successful launch to the public. Hence, the idea of decentralizing financial transactions has been revolutionized through blockchain technology and cryptocurrency. Similar to Bitcoin, people often associate Ethereum as another type of cryptocurrency. Although it’s not completely wrong, it’s also crucial to know that there’s so much more to Ethereum rather than just a basic cryptocurrency.

Little did you know; Ethereum is an open-source platform developed on blockchain technology that allows software developers to create and deploy decentralized apps. Within Ethereum’s platform, ether (ETH) is a form of cryptocurrency utilized to handle and process applications developed on the Ethereum blockchain.

Like other Ethereum newbies, it’s normal to be perplexed by the many definitions, concepts, and processes involved within the Ethereum blockchain. If you want to have an overview regarding how Ethereum works, its definition, and its purpose, this article is appropriate for you.

Short History of Ethereum

Ethereum’s concept was published by a 26-year old Russian-Canadian programmer named Vitalik Buterin. In 2013, he published Ethereum’s whitepaper titled “A Next-Generation Smart Contract and Decentralized Application Platform” prior to the project’s release in 2015. In the publication, Buterin explained Ethereum as a new platform developed easier for different forms of decentralized apps, or also known as dapps, that developers can utilize.

The Russian-Canadian programmer came up with the concept of utilizing blockchain technology beyond financial transactions that Bitcoin protocols initially introduced. Aside from blockchain’s initial function by running cryptocurrency transactions, blockchain developers can utilize Ethereum to develop and manage new applications. After numerous testing and campaigns, Ethereum was initially released to the public via Frontier in 2015.

What Is Ethereum?

Ethereum is a software operating on a large network of computers that makes sure that small computer programs (smart contracts) and data are simulated and processed across all computers within the network without a central processor. The goal is to implement an unstoppable self-sustaining and censorship-resistant decentralized global computer.

It encompasses Bitcoin’s concept of Blockchain which authenticates, saves, and simulates transaction data on numerous computers worldwide. Ethereum takes this process to an advanced level. Aside from that, it also processes computer code regularly on several computers around the globe.

If Bitcoin focuses on a distributed data system, Ethereum also works the same but with additional computations. The small computer programs that are processed are known as “smart contracts”. These smart contracts facilitate the exchange of shares, property, content, money, and other valued transactions. In addition, they are operated by participants on their machines utilizing an operating system called “Ethereum Virtual Machine”. Speaking of the Ethereum Virtual Machine, this core innovation of Ethereum is a Turing software that operates on the Ethereum network. Through EVM, anyone can process any program regardless of the programming language used.

Understanding How Ethereum Works

As mentioned, Ethereum revolutionizes how the internet currently functions. Its goal is to allow online computer systems to process without the help of third-party apps/services. Instead, Ethereum allows software apps or programs to run on a large network of several private computers or also named as “distributed system”.

Similar to many websites, pieces of information are saved on a server. Specifically, it’s a computer with a database containing the website’s information. If that particular computer is corrupted, all the website and its associated data are gone. With blockchain technology, that same database is shared with a vast network of computers. As a result, all information within the database is public, and the database can’t be corrupted or shut down as long as computers are still sharing it.

In a nutshell, an Ethereum network replaces traditional, centralized massive cloud servers and computers with a large, decentralized network of numerous small computers that are operated by users (including you) worldwide.

The good side? Ethereum eliminates the storing of user’s sensitive data and personal information in central servers of corporate companies or third-party clients. Hence, the possibility of your data being corrupted, stolen, sold, or hacked is never a possibility with Ethereum.

Is Ethereum The Same With Bitcoin?

Similar to Bitcoin, Ethereum utilizes a blockchain network on a public distributed system. Although Ethereum and Bitcoin have significant technical variations, the most crucial difference to understand is to discover both platform’s capabilities and purposes. Bitcoin highlights a specific implementation of blockchain technology – a peer-to-peer automated cash system allowing virtual Bitcoin transactions or payments. While Bitcoin is utilized to identify digital currency’s ownership, Ethereum emphasizes processing the programming code of any decentralized platform or app.

With Ethereum, miners work to gain Ether (ETH) instead of mining for bitcoins. Speaking of Ether, it is a form of crypto token that runs the network. More than a tradeable cryptocurrency, ETH is also utilized by developers to pay for services and transaction fees on the Ethereum network.

Another type of crypto token for paying miners’ fees for involving transactions in their block is called gas. Every smart contract transaction needs a specific amount of gas included to attract miners to store it in the blockchain.


Ethereum’s development team’s goal is to develop a decentralized network of computers that can process calculations, authorize communications, and store data in a censorship-resistant platform. It’s difficult to generalize what Ethereum is primarily used for since it can be anything you can program using a computer. However, if you want to track something and fear that someone might manipulate the outcome, Ethereum can truly help with this type of scenario.

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Although the outcome is just like regular mobile apps and websites, the implementation using Ethereum is completely secure and uncompromised. As long as it’s developed properly, not even the developer can break the rules and manipulate the transactions.

With Ethereum’s fairly new technology, it becomes more robust and fully developed once more and more people are going to build on it, develop, test, and implement it.

In a nutshell, Ethereum is an open system and anyone with a stable connection to the web is welcome to access it. Hence, it’s one of the most promising technologies in the world of Blockchain!

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