How is Ethereum built?

Ethereum like Bitcoin and all other cryptocurrencies is built and works on the basis of a blockchain network, a distributed public ledger where all transactions are verified and recorded. It involves open-source blockchain that utilises smart contract functionality, whereby it ‘builds on Bitcoin’s innovation, with some big differences’. This difference being, both cryptocurrencies allow the use of digital currencies without the need of a third party financial intermediary, however, Ethereum is programmable, thus, can be used in a variety of ways for lots of different digital assets (including Bitcoin). As Ken Fromm, director of education and development at the Enterprise Ethereum Alliance detailed – ‘Ethereum is different from Bitcoin in that the network can perform computations as part of the mining process… This basic computational capability turns a store of value and medium of exchange into a decentralised global computing engine and openly verifiable data store’. 

Through its virtual machine (EVM), Ethereum’s blockchain was developed to support the creation of decentralised applications and smart contracts. Here, ETH has become far more than a digital currency that allows payments between two entities, but a ‘marketplace of financial services, games and apps that can’t steal your data or censor you’. This allows users to build a decentralised application that runs via the Etherum blockchain, just as software would run via a computer. Besides being a great speculative investment and being used to buy and sell goods and services, this is where Ethereum’s great value comes from.