Ethereum`s Unique Characteristics and Ecosystem

So how does Ethereum achieve these objectives? Ethereum was designed as a blockchain with a built-in ‘Turing complete’ programming language – called Solidity – that can be used to create smart contracts.

All that ‘Turing complete’ means is that Solidity is a programming language capable of programming for any hypothetical computation. Thus, in theory, any computer application can be programmed in Solidity and run on the Ethereum platform. This language, therefore, is what Ethereum’s ‘smart contracts’ are written in. 

Just like Bitcoin uses blockchain technology to store its transactional data in a secure and decentralised way, Ethereum uses blockchain technology to store transactional data and contractual data.

By providing a blockchain complete with a programming language, Ethereum can achieve its objective of being a platform for decentralised, reliably secure and universally accessible apps to be built on. 

From this, we can start to understand the ecosystem that Ethereum enables and why there is so much interest in the platform. 

Before Ethereum, the blockchain world was limited to one main application (cryptocurrency through Bitcoin) and other speculative projects such as Namecoin that used blockchain to sell decentralised domain names. Ethereum provides the platform for any decentralised application to be built on top of. 

But how will these DApps work? Well, a key component of their functionality is Ethereum’s native currency Ether used as sound money for transactions on the Ethereum platform. As with Bitcoin, the Ethereum platform rewards users that verify transactions by charging fees. Ethereum’s transaction fees are known as Gas (more on this later).

Unlike Bitcoin, however, Ethereum also allows for other currencies to be used on the platform. Anyone can create assets and use Ethereum to trade them. These are known as tokens. 

Some famous applications of tokens include:

1. Stablecoins: tokens tied to a traditional currency’s value, solving much of the volatility problem with current cryptocurrencies. 
2. Governance tokens – these can represent voting power for a decentralised app. 
3. Collectables tokens – these tokens can represent collectable items such as digital art or collectable game items. These are commonly known as NFTs (non-fungible tokens).