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What exactly is Ethereum, and how does it work?

What exactly is Ethereum, and how does it work?

The Ethereum blockchain provides open access to digital money and data-friendly services for everyone, regardless of their background or geographic location.

This technology, which was developed by the community, runs on top of Ethereum (ETH) and dozens of other apps.

The first official Whitepaper of Ethereum was originally published in 2014 by Vitalik Buterin, the creator of Ethereum, before the project’s launch in 2015. It’s important to note that Ethereum, like many other community-driven, open-source software projects, has undergone significant changes since its beginning in 2009.

In order to create an alternative protocol for developing decentralized applications, Ethereum is designed to provide a different set of tradeoffs that we believe will be very useful for a large class of decentralized applications, with a particular emphasis on situations where rapid development time, security for small and rarely used applications, and the ability of different applications to interact very efficiently are important considerations.

What exactly is Ethereum, and how does it work?
PHOTO By Bram van Oosterhout

Ethereum accomplishes this by constructing what is essentially the ultimate abstract foundational layer:

A blockchain with a built-in Turing-complete programming language, which allows anyone to write smart contracts and decentralized applications in which they can define their own arbitrary rules for ownership, transaction formats, and state transition functions, among other features.

Even the most basic version of Namecoin may be implemented in two lines of code; other protocols, like currencies and reputation systems, can be built in less than twenty lines of code.

The platform also allows for the development of smart contracts, which are cryptographic “boxes” that store value and only unlock it if certain conditions are met. Smart contracts have a lot more power than Bitcoin scripting because they have Turing-completeness, value-awareness, blockchain-awareness, and the ability to keep track of state.

With information from Ethereum Whitepaper | ethereum.org

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