a blockchain-based cryptocurrency platform that runs smart contracts. It was originally authored by Vitalik Buterin and Gavin Wood. Ethereum is a platform that is intended to allow people to easily write decentralized applications (dapps) and smart contracts using blockchain technology. A smart contract is the simplest form of decentralized automation, and is defined by Vitalik Buterin, Ethereum co-founder, as follows: “a smart contract is a mechanism involving digital assets and two or more parties, where some or all of the parties put assets in and assets are automatically redistributed among those parties according to a formula based on certain data that is not known at the time the contract is initiated. [e.g.] A wants to pay $500 to B to build a website. The contract would work as follows: A puts $500 into the contract, and the funds are locked up. When B finishes the website, B can send a message to the contract asking to unlock the funds. If A agrees, the funds are released. If B decides not to finish the website, B can quit by sending a message to relinquish the funds. ”
A decentralized application is similar to a smart contract, but different in two key ways. First of all, a decentralized application has an unbounded number of participants on all sides of the market. Second, a decentralized application need not be necessarily financial, it can be a company or service that isn’t controlled by any single individual, board or other central entity. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. Proponents of the technology are envisioning ways to replace things that today require a centralized leadership, from businesses and services to governments.