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Ethereum

Ethereum is an open-source, decentralized blockchain network that enables the creation and execution of smart contracts and decentralized applications (dApps). Launched in 2015, it introduced the concept of a programmable blockchain, moving beyond simple peer-to-peer value transfers. By utilizing the Ethereum Virtual Machine (EVM), it allows developers to build self-executing code that operates without intermediaries, censorship, or downtime, creating a foundation for a new internet economy, often referred to as Web3.

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Definition

Ethereum is an open-source, decentralized blockchain network that enables the creation and execution of smart contracts and decentralized applications (dApps). Launched in 2015, it introduced the concept of a programmable blockchain, moving beyond simple peer-to-peer value transfers. By utilizing the Ethereum Virtual Machine (EVM), it allows developers to build self-executing code that operates without intermediaries, censorship, or downtime, creating a foundation for a new internet economy, often referred to as Web3.

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Simple explanation

If Bitcoin is a simple calculator that only does addition and subtraction, Ethereum is a powerful smartphone that can run thousands of different apps. It is a shared computer that anyone in the world can use to build applications that don’t need a middleman, like a bank or a social media company, to run them.

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Why it matters

Ethereum transformed blockchain technology from a ledger for payments into a programmable infrastructure for decentralized software. It powers the vast majority of current DeFi and NFT ecosystems, setting the standard for how decentralized systems interact.

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How it works

Ethereum works by running smart contracts—code that automatically triggers actions when conditions are met—on a distributed network of computers called nodes. Every node keeps a full copy of the blockchain, ensuring that no single entity controls the network. When code is executed, every node updates its record, ensuring consensus and trust.

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Real-world example

The Uniswap protocol allows users to swap tokens directly without a traditional exchange, all running on the Ethereum network.

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Advantages

  • Extensive developer ecosystem
  • Highly decentralized and secure
  • Supports complex programmable logic

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Limitations

  • Scalability issues during high demand
  • Higher complexity for new users
  • Significant energy transition management

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Common misconceptions

  • Some people think Ethereum is just a cryptocurrency, ignoring its capability as a global computing platform.
  • Many believe Ethereum is a company with a central office, but it is actually a decentralized protocol maintained by global contributors.
Canonical knowledge ID: glossary:ethereum