In four words or less: Programmable money and smart contracts.
Like Bitcoin, Ethereum (ETH) runs on a global decentralised network called a blockchain. While Bitcoin uses its network to send and receive bitcoin the digital currency, Ethereum is designed to help companies deploy decentralised applications (Dapps)on the blockchain. Ethereum wants to reshape how the Internet works. Ethereum’s vision is to create a “World Computer” – a global network of private computers that run Internet applications without the need for third parties (like the big tech companies). The idea is to create a fairer system that anyone can use. With Ethereum, all payments are made using its own digital coin, called Ether (ETH).
What problem does Ethereumsolve:Big tech companies have too much control over our data. That’s not cool. Legal contracts are inefficient and expensive. Automatic smart contracts remove the need for expensive middlemen (like lawyers).
Properties of Ethereum:
- Ethereum’s programming language, Solidity, is “Turing complete,” which allows for very sophisticated applications
- You can build conditional contracts that execute autonomously. These are called “smart contracts” and can execute agreed upon terms
- Smart Contracts can be legally enforceable and could benefit countless industries by removing time and human error from contract processes
- Combining smart contracts with Blockchain tech means that anyone can create their own monetised Internet applications. When the technology matures, this is likely to be a big deal
- Ethereum runs on a proof-of-work blockchain. The Ethereum Foundation intends to migrate to a proof-of-stake model in the future
Adoption and penetration:
Ethereum is the second largest and best known crypto-coin after Bitcoin. It has a large global community of developers. Decentralised apps enable a model of collective ownership using tokens. Tokens are sold by dapp owners to investors during Initial Coin Offerings, or ICOs. These tokens have specific utility relative to the company's function. This means many other tokens rely on the Ethereum network which gives Ethereum value.
Management and governance:
Ethereum was created by a team led by Vitalik Buterin, a Russian born, Canadian raised computer programmer. In 2013, when he was 19 years old, Buterin published the white paper that would lay the foundations for the Ethereum network. The Ethereum community see Vitalik as an eccentric genius, which he probably is. Ethereum is developed by a global team of developers for The Ethereum Foundation, a Swiss nonprofit orginisation.
Risks and limitations:
As is the case with many blockchain projects, Ethereum’s most pressing issue is scaling. When the Cryptokitties dapp was launched on Ethereum in late 2017, the entire network slowed down and transactions became delayed. What happens when hundreds and then thousands of dapps go live? Fortunately the Ethereum team are working on several scaling solutions.
Competition: EOS, NEO, ETC