Ethereum, Explained Simply
Bitcoin's notebook records payments. Ethereum's notebook can also hold instructions that run by themselves.
Bitcoin showed that a shared notebook can record payments. Ethereum asked a bigger question. What if the notebook could also hold instructions?
The one difference
In Bitcoin, a line in the notebook says: this person sent that person some money.
In Ethereum, a line can also say: when this happens, do that.
People call these instructions smart contracts. The name sounds hard. The idea is not. It is a rule that everybody can read, and that runs by itself.
An example. Hold this money until the delivery is confirmed, then release it. Nobody has to be trusted to do it. The rule does it.
Why this changed everything
Once a notebook can hold rules, people can build things inside it.
Almost every stablecoin runs on rules like these. So does most of what people call web3.
Ethereum also keeps balances, not coins. It works more like a bank account than Bitcoin does. That is easier for developers to build on.
What Ethereum is good at
It has the most people, the most money and the most things built on it.
It is also the most expensive of the chains in this series. When many people want to write at the same time, the price goes up.
That cost is the reason the next page in this series exists.
Frequently Asked Questions
What is a smart contract in simple words?
It is a rule stored in the blockchain. It says: when this happens, do that. It runs by itself, so nobody needs to be trusted to carry it out.
How is Ethereum different from Bitcoin?
Bitcoin records payments. Ethereum records payments and rules. Ethereum also keeps balances like a bank account, while Bitcoin keeps coins.
Why is Ethereum expensive?
Space on each page is limited. When many people want to write at the same time, they pay more to be included, so the fee rises.