what is Etherum

Ether is a necessary element -- a fuel -- for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).

A platform for decentralized applications, Ethereum was invented by Vitalik Buterin and announced in early 2014. At the time, Buterin indicated in public appearances he was keen to create an alternative blockchain-based system that would offer a superior arsenal of tools to global developers.

Launching in beta in July 2015 and in a production version this March, Ethereum’s big innovation is that it runs Turing-complete smart contracts, applications that rely on if-then scenarios to execute specific terms of an agreement.

Basically, smart contracts ensure that once a predetermined condition is met, the corresponding clause contained in the contract is fulfilled, and the Turing-complete factor has been heralded as allowing developers a new expressiveness in writing such code.

Today, smart contracts can run on the public Ethereum blockchain, a distributed ledger technology that is used to keep track of all related transactions and agreements.

The smart contracts that run on its blockchain could have widespread applications, as developers could use them to create markets, execute transactions based on agreements created long ago and keep track of pledges made by different counterparties.

Many users have already begun taking advantage of these myriad options, developing a wide range of apps that can be used to set up ridesharing applications, sports bets and even investment schemes, The New York Times has reported.

But as open-source technology, corporations are free to create their own private blockchains based on Ethereum that do not use the public Ethereum blockchain, and as such, don’t use Ethereum’s token, ether.