By: Sameer Zubairi | 3 min read | 14/12/2018

What Is Ethereum?

It’s truly mind-blowing to think how new technology can seep into our lives and make itself feel ordinary like it’s always been there. Only a little over ten years have passed since Steve Jobs announced the first iPhone, and now smartphones are absolutely ubiquitous in our society; it’s rare to find people who don’t have one.

With such a rapid evolution of technology it can be difficult to understand the underlying processes, but easy to enjoy the product. While we gleefully ‘like’ our friends’ photos or comment on an online video, our personal information is being passed around in the background. The question then arises, how can someone enjoy all the fruits of the internet, without surrendering their personal info?

A digital currency called Ethereum might just be the answer.


As the young Canadian programmer, Vitalik Buterin passionately blogged about the newly emerging world of cryptocurrency for Bitcoin Magazine, he uncovered a hidden treasure. At that time, Bitcoin was the only major digital coin, and the primary goal was to decentralize the financial markets of the world by using a distributed ledger technology, known as blockchain. By providing a copy of a ledger including everyone’s transactions to all participants of the network, while simultaneously hiding personal information using encryption techniques, the exchange of Bitcoin from one person to another could be validated through consensus. Such transactions were both secure and transparent. This is where Buterin saw an enormous amount of untapped potential.

If blockchain could truly process the transfer of information in a more transparent, secure, cheaper and faster way, then it could improve not just financial transactions, but all kinds of exchanges. Essentially what Buterin wanted to do was create a decentralized internet that ran on a distributed network.

He realized that the nature of Bitcoin made it inaccessible from a development standpoint. Therefore, Buterin planned to launch a blockchain network called Ethereum, where developers would flock to deploy Decentralized Applications (Or DApps, pronounce “Dee-Apps”). Such applications would no longer need a data collector in the middle, like Google or Facebook, to process information and grant special access. With DApps, two users could simply transact with each other while preserving their personal data.

There are a number of reasons why Ethereum was able to unlock this potential over Bitcoin, which had already been in circulation for several years.

  1. In contrast to the specialized use of Bitcoin, the creators of Ethereum recognized that it is incredibly difficult for the average developer to launch their own blockchain network because it requires extensive knowledge of mathematics, computer science, and cryptography. Therefore, the Ethereum network is marketed to be a blockchain platform with open access, where anyone can launch their own applications. Similar to how the internet functions, where both giants like Netflix and smaller apps like Flappy Bird can run freely.
  2. The script used to run Ethereum was also designed to be a lot more versatile. For example, Bitcoin only allows public, permissionless transactions to occur, whereas Ethereum offers a lot more flexibility. Transactions may be permitted or permissionless. These slight differences can be important for specialized uses when an application needs to behave in a complex way.


Although he had recognized the potential of blockchain by studying Bitcoin, Buterin soon realized that his ideas for improving this technology would never be implemented. In 2013 a white-paper outlining the details of Ethereum, a cryptocurrency which could publicly provide a blockchain framework for app developers, was released. The next milestone was an initial coin offering (ICO) of Ether.

This internal currency tied to the Ethereum blockchain became available in exchange for Bitcoin, where investors could purchase 1000-2000 Ether for 1 Bitcoin, raising around 18,439,000 USD of capital. Finally, in 2015 the Ethereum Frontier Network came online and programmers around the world were able to use it to develop Decentralized Applications or DApps. Today, Ethereum is the second largest cryptocurrency in terms of market cap.


Considering that Bitcoin was launched as a reaction to the 2008 financial crisis, it becomes clear that it was only meant to be used as a currency and nothing more.

This is the reason why Ethereum is so revolutionary in comparison. There’s an old saying that captures this beautifully, “If you stand too close to an elephant, you won’t be able to see the elephant.” What Vitalik Buterin did, was view an already existing technology from a much broader lens. This uncovered some serious potential with the capacity to revolutionize and automate our world while maintaining trust.

The revolutionary aspect of Ethereum lies in its ability to unleash the power of a blockchain ledger system in various industries. Bitcoin was fundamentally tied to the financial world, but Ethereum is able to break the mold.

Ethereum has the unique capability of allowing complex functions to be coded and executed when a transaction is about to occur, these are known as Smart Contracts. You can find out more about Smart Contracts here on GetSmart Hub.

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