Ethereum

Ethereum is a cooperatively-run, global, transparent database. Through mutual effort, participants from all over the world maintain Ethereum’s public record of addresses, which reference both user accounts and smart contract applications. These records work together much like the user accounts and software of a modern desktop computer, except that Ethereum is:

Cooperatively-run: Ethereum’s fundamental operation comes from the collective effort of its participants worldwide. No single party can make changes to how Ethereum works. Publicly-accessible: Anyone anywhere in the world can interact with Ethereum, its users, and its applications. Transparent: Anyone anywhere in the world can download and view all the information in Ethereum’s database. Anyone can be a user of Ethereum. Creating an account is simple, and does not require a phone number, email, or physical address. Instead, users install an application called a “wallet,” which generates a unique identifier for that user called an “address” and a password-like number for authentication called a “private key.” Much like a person with multiple email addresses, Ethereum’s users can create and use as many addresses as they want. Unlike with email, however, Ethereum’s users are not “customers” in the traditional sense. They are participants in a global computing system running on open-source software, which functions without third-party oversight. It is also important to note that Ethereum addresses controlled by the same user are not necessarily publicly linked to one another; they are simply unique identifiers that belong to the user who has the corresponding private key.

By sharing an address, users are able to receive tokens (e.g. crypto-assets like Ether) from anyone, anywhere in the world. Unlike a traditional payment service, sending and receiving tokens on Ethereum does not require an intermediary. Instead, the sender broadcasts their intent to transfer tokens, signs their message mathematically using the corresponding private key, and Ethereum’s network collectively updates the global records of the sender and receiver addresses with the new balances. At no point in this process does a third party take custody of the tokens being transferred.

In addition to sending and receiving tokens, user accounts can interact with smart contracts, which are applications that extend the functionality of Ethereum. When developers program smart contracts, they decide what operations the smart contract will support and what rules those operations must follow. These rules and operations are written using code that is broadcast to Ethereum’s network, just like the token transactions described above. Once a smart contract’s code is added to Ethereum’s records, it receives a unique address and can be interacted with by any user to automatically carry out the rules and operations it supports.

In essence, smart contracts are open-source applications that anyone can deploy to Ethereum. Just like the rest of Ethereum, smart contracts can be viewed and used by anyone, anywhere, and without relying on an intermediary.