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Ethereum is a completely decentralized, open-source platform that runs on the Ethereum blockchain. After an Initial Coin Offering (ICO) in 2014, the Ethereum platform was finally released in July 2015 by Vitalik Buterin.
The major feature of the Ethereum platform is the ability to utilize smart contracts, a mechanism for creating contracts that can facilitate transactions automatically being triggered upon the completion of an agreed term from another party. A simple example of this could be with a web design agency working with a freelance web developer to complete some web development work. A smart contract could be created and stored publicly within the Ethereum blockchain so that as soon as the web development work has been completed and verified, payment will be sent directly to the freelancer. This removes any potential risk related to lack of trust with individual parties involved.
Ethereum also allows for decentralized apps to be created within its platform, and has a coding standard, ERC-20, for developers to work within in order to standardize the technology being built within it.
Like Bitcoin and many others, Ethereum has its own native cryptocurrency token, Ether. Ether can be acquired through a reward for mining activities, in addition to transaction fees (in the form of “Gas”, which is another token used within Ethereum for processing transactions) or via trading on exchanges. Ethereum leverages “Proof of Work” for consensus, but there are plans to move to “Proof of Stake” in the future, and whilst there is no defined fixed supply of Ether, it is unlikely to ever reach much higher than 100,000,000.