Ethereum is the world’s leading programmable blockchain for building smart contracts or decentralized applications (DApps). The Ethereum network maintains a shared ledger of digital value, and smart contracts allow you to program new forms of digital value that were previously impossible.
Ether (ETH) is the native cryptocurrency of the Ethereum network, used to pay for transaction fees called gas. The network natively supports smart contracts, which are essential tools behind decentralized applications. Many decentralized finance (DeFi) and other applications use smart contracts in conjunction with blockchain technology.
Ethereum can be used by anyone to create secure digital technologies. It has a native cryptocurrency token designed for use on the blockchain network, which can also be used by participants to pay for work done on the blockchain.
Ethereum is designed to be scalable, programmable, secure, and decentralized. It is the blockchain of choice for developers and enterprises that are creating technology based upon it to change the way many industries operate and how we go about our daily lives.
A smart contract is a self-executing agreement in which the terms of the contract between buyer and seller are directly written into lines of code. The code and the agreements are distributed across a decentralized blockchain network. The code controls the execution, and transactions are both trackable and irreversible. Smart contracts allow for trusted transactions and agreements to be carried out among anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. While blockchain technology was originally associated primarily with bitcoin, it has evolved to underpin a wide variety of applications beyond just virtual currencies.
At its core, the Ethereum blockchain is a distributed ledger of digital assets owned by accounts and smart contracts. These digital assets are represented on the blockchain by tokens that are created by smart contracts. Tokens built on Ethereum serve various purposes, such as currencies, tokenized physical assets like gold, a share of ownership in a DApp, and more.
Decentralized finance, or DeFi for short, refers to financial smart contracts, decentralized applications (DApps), and protocols built on Ethereum. Currently, financial DApps are the most popular use case for Ethereum. Popular DeFi applications include stablecoins, peer-to-peer lending protocols, decentralized exchanges, asset management protocols, and derivative markets.
DeFi is unique because its smart contracts are publicly accessible and highly interoperable. Similar to Lego, individual parts of DeFi can be pieced together to create something new. Therefore, decentralized finance excites many people because of how it empowers individuals and creates new opportunities like never before.
Games built on Ethereum use smart contracts to establish the rules and ownership of in-game assets. Items are represented as tokens in your Ethereum wallet, ensuring that you truly own your inventory. You never have to worry about losing access to your items, servers shutting down, or getting banned. Additionally, because your items are tokens on Ethereum, they can interact with other smart contracts.
ERC-721 tokens are unique Ethereum tokens that are cryptographically provable. This makes them perfect for representing collectibles, artwork, or anything that’s one-of-a-kind.
The decentralized and trustless nature of smart contracts makes them ideal for coordinating people and resources. Decentralized autonomous organizations, or DAOs, are the most popular way of achieving this goal. DAOs are entities similar to familiar organizations like corporations, cooperatives, and non-profits.
However, these organizations exist as smart contracts on the blockchain and their programming determines the rules for membership and operation. Thus, DAOs have no central operating authority that can disrupt their operation or steal their assets. The reduction in effort, trust, and resources needed to coordinate has led to interesting experiments in profit models and on-chain governance.
Ethereum provides a neutral and secure platform for building identity systems. Identity DApps leverage the secure and decentralized nature of the Ethereum network to store personal information safely. These DApps store items such as government IDs, medical records, banking information, and many other pieces of data. Additionally, login credentials powered by Ethereum allow you to log into sites using the private keys to your Ethereum wallet.