What is Ethereum?

Introduction to Ethereum – one of the most popular cryptocurrencies

Ethereum is a public, open-source blockchain-based distributed computing platform featuring smart contract functionality and cryptocurrency where it made some significant improvements on the basic Bitcoin architecture. So what is Ethereum exactly? 

The invention of Ethereum in 2013 is credited to Russia-born Vitalik Buterin who developed a decentralised platform that allows app developers to build on their own products. 

Such decentralisations allow to codify, secure and trade almost anything. It can be applied to anything from crowdfunding to commercial agreements to intellectual property to financial exchanges and instruments,

Another prominent feature attributed to Ethereum success is smart contracts. It enforces the performance of commercial agreements and particular transactions, compelling partiers not to negate on their agreement, introduces the mechanisms to process the refunds if one party doesn’t deliver its side of a deal. However, while such smart contracts aim to improve the efficiency in trading cryptocurrencies we still yet to see if these measures are enough to illuminate these issues completely.

What is Ethereum cryptocurrency token?

The easiest way to think of a token is a hybrid of a crowdfunding campaign like Kickstarter and initial public offering (IPO) when the company lists its stocks on a stock exchange.

There is a new phenomenon on the market called cryptocurrency token offerings or Initial Coin Offering (ICO). This new fundraising method allows companies to raise millions of dollars in a matter of days or even minutes 

The crypto world had gone mad for the token offerings and we have seen some great success stories raising tens of million of dollars. Some of the major ICOs are listed below:

Ethereum also has cryptocurrency token called “Ether” which can be transferred from one party to another. As other cryptocurrencies – Ether is used to compensate blockchain participants for performed computations within the network. It also has an internal transaction pricing mechanism which is used to prevent spam and allocate resources on the network.

The Ethereum Virtual Machine (EVM)

Before Ethereum was created, blockchain applications for cryptocurrencies had a number of limitations and were designed to do a very limited set of operations. A good example is a Bitcoin, which was developed to operate only as a peer-to-peer digital currency. One of the main downsides of Bitcoin is that it is limiting users only to its own ecosystem.

So with Bitcoin many developers faced a problem. While many of them saw the need to expand set of functions offered by Bitcoin and other similar applications, it was not easy to do so. Recognising the limitations of the old approach, Ethereum’s creator, Vitalik Buterin developed the new framework and open-source platform that allows developers to develop their own blockchain applications.

The Ethereum Virtual Machine (EVM) is designed to provide security and execute untrusted code by network participants all over the globe. It is also used to prevent Denial-of-service attacks, which have become quite common in the cryptocurrency world. In addition to that, the EVM ensures programs do not have access to each other’s state, ensuring communication can be established without any potential external interference.

To put in simple terms, the Ethereum Virtual Machine is designed to serve as an execution environment for smart contracts based on Ethereum. With smart contract becoming more and more popular these days, this technology can be used to automatically perform specific actions or conduct transactions on the Ethereum blockchain. Smart contracts are already revolutionising finance and other industries, with may large investment banks and financial institutions moving into this space.

Ethereum vs Bitcoin?

While many people will compare these two cryptocurrencies, the reality is that they are a vastly different project and have different intentions. Bitcoin has emerged and is currently seen as a relatively stable cryptocurrency, while ethereum aim to achieve more and have much broader applications with smart-contracts being just one of them. IN a nutshell, ethereal is not just a digital currency but has greater potential compared to Bitcoin which we are yet to witness.

One of Ethereum’s core innovation is the Ethereum Virtual Machine (EVM). EMV is a Turing complete (system of data-manipulation rules) software that runs on the Ethereum network. EVM enables participants to run any program on its network, regardless of the programming language it is written on. EVM makes the whole process of creating other blockchain applications much faster and easier than ever before. Ethereum enables the development of other blockchain applications on one platform rather than developing entirely original blockchains from scratch.

What are the Benefits of Ethereum Decentralized Platform

Decentralized applications (dapps) are computer applications that consist of programmed self-executing agreements (smart contracts), that are commonly built, stored and run on the ethereum blockchain, therefore benefit from the blockchain’s properties.

Unlike most web-based and mobile applications, which are operated by companies using proprietary code or software, dapps are open source and rely on disintermediation, where instead of relying on a company like Amazon or Uber to match buyers and sellers of goods and services, you can connect with them directly, peer to peer.

Smart contract features enable dapps ecosystem to conduct automated transactions, which quite often rely on the use of the dapp’s native token as a payment mechanism to enable access to and rewards from using the application. Such structure of incentives motivates contributors, maintainers and participants of that dapp’s platforms.

Some of the main benefits of using decentralised platforms are as follows:


Many people see it as a main benefit of block-chain. Without having any central point of failure and secured by using cryptography, the applications on dapps ecosystem are strongly protected against any fraudulent activities and hacking attacks.

Zero downtime

Thanks to the decentralisation these apps cannot be switched off and can never go down as multiple versions are always walkable on the network.

Corruption proof

The consensus principle of the established network that these apps are build upon, makes censorship and corruption impossible.


It is not possible for a third-party to make any unauthorised changes or adjustments to the decentralised platform’s data.

Weaknesses of Decentralised Applications

Despite the number of advantages, decentralised applications have certain faults and have to be improved. Smart contracts and its code are the results of human input, therefore they will be always as good as the code and people who are writing it. For example, if there is a mistake or a problem in the actual code that gets exploited, there is no way to stop that exploitation or an attack besides attaining a network consensus and having to re-write the underlying code. That actually goes against the core blockchain’s principle that is supposed to be unchangeable.

That said blockchain and ethereum are new technologies which are developing very fast. As with every new phenomenon, it takes time to adjust and develop a proper framework for market participants. Some additional regulation might be required and people also need to learn from possible mistakes. We see it as necessary and required transition period and remain very positive about the development of blockchain and ethereal in particular.


Now as you know what is Ethereum you may want to learn more about how you can buy Ethereum and learn to trade with it for profit, hopefully!

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