Like Bitcoin, Ethereum harnesses the power of the Internet.

Ethereum is like a foundation programming language; and at the heart of its design are smart contracts and dApps (short for decentralized applications).

So, what does that really mean?

For example, let’s say, corporate entities collect and store your personal information on their servers at a central location.

If one of their locations is hacked, the big data breach will most certainly be front page of the news.

So, like Bitcoin, Ethereum uses the blockchain technology to decentralize information, thus removing the need to trust those other entities with your very personal and private information.

Ethereum uses smart contracts, which is code written to ensure that transactions can only take place when certain conditions are met.

Once one of these contracts is written, it can’t be changed or “hacked” because they are run using dApps – decentralized applications that do not run on a traditional central server. Instead, they run on a blockchain –using it to decentralize their server.

Now to do this, Ethereum, like Bitcoin, uses a proof of work protocol. In both Bitcoin and Ethereum, this is a process called ‘mining’.

In other words, nodes verify transactions; and are rewarded with a new currency. For Ethereum, the coin is called Ether.

Ether fuels the Ethereum system. For this reason, it is often referred to as ‘gas.’ Ether is digital fuel for the automated smart contracts of the Ethereum network. Unlike Bitcoin, there is no cap on how much Ether can exist.

Smart contracts aren’t really all that smart. But they do make Ethereum a very popular blockchain.