The Ethereum blockchain network launched in 2015 and expanded on Bitcoin’s distributed ledger technology with the introduction of smart contract technology. Like Bitcoin, the Ethereum network relies on underlying blockchain technology that is operated and managed by a decentralized, globally distributed computing network. Unlike the Bitcoin blockchain, which can only store an extremely limited amount of information and so is predominantly used to record transfers of bitcoin, the Ethereum blockchain has the ability to store more complex information within its ledger, enabling “smart contract” technology to be built and run on the Ethereum blockchain.
Smart contracts are self-executing sets of code that carry out any given set of programmed instructions. Today, they are commonly used for applications ranging from financial services to games to art; to give a simple illustrative example, a smart contract could be programmed to release funds to a specific address each year on someone’s birthday.
Since its launch, Ethereum has become known as the “programmable blockchain,” and is the de facto home of smart contracts, “decentralized applications” (dApp) and “decentralized finance” (DeFi). Ethereum’s native asset or token—ether (ETH)— is the world’s second largest cryptocurrency, with a market capitalization of over $500 billion at the time of writing, and is used to pay for many platform-specific services.1 Additionally, another large part of Ethereum’s value is derived from the crypto tokens belonging to various projects built upon the Ethereum network, with dozens of the top 100 cryptocurrencies by market cap being Ethereum-based at the time of writing.
1 Source: Coinmarketcap, as of November 23, 2021