Ethereum is a decentralized platform that facilitates the execution of smart contracts: applications that function precisely as programmed without any possibility of downtime, censorship, fraud, or interference from third parties. These applications operate on a custom-built blockchain, a robust global infrastructure capable of transferring value and representing property ownership.
This infrastructure allows developers to create markets, maintain registries of debts or promises, transfer funds based on pre-defined conditions (such as those in a will or futures contract), and perform numerous other functions, all without intermediaries or counterparty risks. The project was initiated through an ether presale in August 2014, supported by enthusiasts worldwide. It is developed by the Ethereum Foundation, a Swiss nonprofit organization, with contributions from brilliant minds globally.
Ethereum aims to offer an alternative protocol for building decentralized applications, focusing on a distinct set of trade-offs beneficial for a broad range of decentralized applications. It particularly emphasizes rapid development, security for smaller and less frequently used applications, and efficient interaction between different applications. Ethereum achieves this by providing an ultimate abstract foundational layer: a blockchain with an integrated Turing-complete programming language. This allows anyone to write smart contracts and decentralized applications, creating custom rules for ownership, transaction formats, and state transition functions. For instance, a basic version of Namecoin can be written in just two lines of code, and other protocols like currencies and reputation systems can be developed in under twenty lines. Smart contracts, cryptographic “boxes” that hold value and release it only under certain conditions, can also be constructed on this platform, offering significantly more functionality than Bitcoin scripting due to the added capabilities of Turing-completeness, value-awareness, blockchain-awareness, and state management.