Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. Ethereum is the second-largest cryptocurrency platform by market capitalization, behind Bitcoin.
Ether is the cryptocurrency generated by Ethereum miners as a reward for computations performed to secure the blockchain. Ethereum serves as the platform for over 260,000 different cryptocurrencies, including 47 of the top 100 cryptocurrencies by market capitalization. Ethereum decentralized Virtual Machine (EVM) can execute scripts using an international network of public nodes.
Ethereum went live on 30 July 2015, with 72 million coins minted. This accounts for about 65 percent of the total circulating supply in April 2020. Due to exploitation of a flaw and subsequent theft of $50 million worth of ether in 2016, ethereum was split into two separate blockchains. The new separate version became Ethereum (ETH) with the theft reversed, and the original chain continued as Ethereum Classic.
The validity of each Ether is provided by a blockchain, called blocks, which are linked and secured using cryptographic hash functions. Blockchain is inherently resistant to modification of the data. Unlike Bitcoin, Ethereum operates using accounts and balances in a manner called state transitions.
A cryptocurrency wallet stores the public and private keys or addresses which can be used to receive or spend ether. These can be generated through BIP 39 style mnemonics for a BIP 32 HD Wallet.
Ethereum smart contracts are stored publicly on every node of the blockchain, and is an example of a distributed computing system with high Byzantine fault tolerance. The downside is that performance issues arise in that every node is calculating all the smart contracts in real time, resulting in lower speeds.
Ethereum’s blockchain uses Merkle trees, for security reasons, to improve scalability, and to optimize transaction hashing that allows for storage savings, set membership proofs , and light client synchronization.