Ethereum and Smart Contracts

Ethereum is an open-source, global, and decentralized computing platform that runs programs known as smart contracts. It uses blockchain technology to synchronize and store system states, while a cryptocurrency called Ether is used to measure and limit the cost of computational resources.

The Ethereum platform allows developers to build resilient decentralized applications by using built-in economic mechanisms. This helps applications remain continuously available while reducing or removing censorship, third-party dependencies, and counterparty risks.

The digital currency Ether is essential to the operation of Ethereum. It serves as the utility currency used to pay for access to the Ethereum platform. However, Ethereum is much more than a digital payment network.

Ethereum was designed as a general-purpose programmable blockchain capable of running a virtual machine that can process arbitrary and highly complex code.

Bitcoin’s scripting language is intentionally limited to simple true-or-false conditions, whereas Ethereum’s language is Turing-complete. This means it is equivalent to a universal computing machine and can perform any computation that a theoretical Turing machine can execute.

Bitcoin introduced blockchain technology, while Ethereum revived and expanded the concept of smart contracts.

At its core, a smart contract aims to achieve the same objective as a traditional contract: to define the obligations, rights, rewards, and penalties of each participating party, and to ensure that transactions are executed according to agreed rules.

Smart contract programs are not merely automated programs running on a blockchain; they can also function as active participants within the system.

*They can respond to received information and send information outward.

*They can receive, store, and transfer value.

*They can temporarily hold assets.

Smart contract programs act like trusted digital entities that carry out operations based on the terms of the contract.

In the past, smart contracts were not widely used in practical industries because there was no trusted execution environment. However, after the emergence of Bitcoin, people realized that blockchain technology itself could naturally provide a reliable execution environment for smart contracts. Ethereum was among the first platforms to recognize and apply the synergy between blockchain and smart contracts.