What is Ethereum?
The foundation for our digital future
A complete beginner's guide to how Ethereum works, the benefits it brings and how it's being used by millions of people around the world.
Ethereum is a network, made up of many communities, and a set of tools which enable people to transact and communicate without being controlled by a central authority. There is no need to hand over all your personal details to use Ethereum - you keep control of your own data and what is being shared. Ethereum has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network.
Still confused? Let's explain everything step-by-step.
What is a cryptocurrency?
Crypto (short for cryptocurrency) is a new form of digital money powered by cryptography.
It all started in 2008 with Bitcoin. You could use it to send funds to anyone anywhere globally. What made crypto different from normal bank transfers or other financial services like Paypal or Alipay is that there was no middleman for the first time.
Wait, what is a middleman?
A middleman is a central authority like a bank or government that intervenes in a transaction between the sender and recipient. They have the power to surveil, censor or revert transactions and they can share the sensitive data they collect about you with third parties. They also often dictate which financial services you have access to.
Things are different with crypto. Transactions directly connect sender and recipient without having to deal with any central authority. Nobody else will have access to your funds and nobody can tell you what services you can use. This is possible because of the blockchain technology upon which cryptocurrencies operate.
What is the difference between Ethereum and Bitcoin?
Launched in 2015, Ethereum builds on Bitcoin's innovation, with some big differences.
Both let you use digital money without payment providers or banks. But Ethereum is programmable, so you can also build and deploy decentralized applications on its network.
Bitcoin enables us to send basic messages to one another about what we think is valuable. Establishing value without authority is already powerful. Ethereum extends this: rather than just messages, you can write any general program, or contract. There is no limit to the kind of contracts which can be created and agreed upon, hence great innovation happens on the Ethereum network.
While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you.
What can Ethereum do?
Banking for everyone
Not everyone has access to financial services. But all you need to access Ethereum and its lending, borrowing and savings products is an internet connection.
A more private internet
You don't need to provide all your personal details to use an Ethereum app. Ethereum is building an economy based on value, not surveillance.