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. Smart contracts allow you to program new forms digital value never thought possible.
Ether (ETH) is the network’s native cryptocurrency. Ether’s used to pay for transaction fees called gas. It natively supports smart contracts, the essential tool 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 any secured digital technology. It has a token designed for use in the blockchain network, but it can also be used by participants as a method to pay for workdone 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 contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. While blockchain technology has come to be thought of primarily as the foundation for bitcoin, it has evolved far beyond underpinning the virtual currency.
At its heart, 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 created by smart contracts. Tokens built on Ethereum serve a variety of purposes: currencies, tokenized physical assets like gold, a share of ownership in a DApp, etc.
Decentralized finance, or DeFi for short, is the nickname of financial smart contracts, decentralized applications (DApps), and protocols built on Ethereum. Financial DApps are the hottest use case of Ethereum at the given moment. Popular DeFi applications are stablecoins, peer-to-peer lending protocols, decentralized exchanges, asset management protocols, and derivative markets.
DeFi is unique because smart contracts are publicly accessible and highly interoperable. Similar to Lego, individual parts of DeFi can be pieced together to make something new. And so, 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. With items represented as tokens in your Ethereum wallet, you know you truly own your inventory. Never have to worry about losing access to their items, servers shutting down, or getting banned. And because your items are tokens on Ethereum, they can be interact with other smart contracts.
ERC-721 tokens are Ethereum tokens that are cryptographically, or in other words provably, unique. And so, this makes them perfect for representing collectibles, artwork, or anything that’s one of a kind.
The decentralized and trustless nature of smart contracts make them ideal for coordinating people and resources. Decentralized autonomous organizations or DAOs are the most popular way of accomplishing this goal. DAOs are entities similar to organizations you are familiar with like corporations, cooperatives, non-profits, etc.
However, these organizations exist as smart contracts on the blockchain. It’s programming determines the rules for membership and operation of this organization. Thus, DAOs have no central operating authority who can disrupt their operation or steal their assets. Reducing the 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 to build identity systems. Identity DApps leverage the secure and decentralized nature of the Ethereum network to safely store personal information. These DApps store items such as government ID, medical records, banking information, and many more pieces of data. Also, login credentials powered by Ethereum allows you to log into sites using the private keys to your Ethereum wallet.