Ethereum builds on top of the Bitcoin blockchain, including key features such as a distributed ledger containing chained blocks, the proof-of-work algorithm, and so on. However, its biggest addition is the introduction of smart contracts, which are coded in a Turing-complete scripting language. Because of this new addition, unlike Bitcoin or its non-smart contract close relatives, Ethereum allows developers to address generic business problems.
Before getting to the basic concepts, we summarize some useful facts on Ethereum as follows:
- Ethereum has three main ingredients:
- Decentralization: For guaranteed execution
- Hashes: For safeguarding the world state
- Signatures: For authorizing programs and transactions