Ethereum Explained Simply! What is Ethereum? The Best Explanation

Back to New at Nirolution Ethereum Blog

What is Ethereum? The Best Explanation (Ethereum Explained Simply!)

In this article we will give you an easy explanation that everyone understands. So first of all, Ethereum is not only a cryptocurrency. It is much more than just collecting and trading digital coins. With our article “Ethereum Explained Simply” will we show you what Ethereum is and how it works.


  1. What is Ethereum?
  2. The difference between Ethereum and Bitcoin
  3. How does Ethereum work?
  4. What is an Ethereum Virtual Machine (EVM)?
  5. How does an Ethereum Account works?
  6. How does an Ethereum mining work?
  7. What is a Smart Contract?
  8. What is Ether?
  9. “Ethereum Explained Simply” Summarize

What is Ethereum?

Ethereum is a decentralized network based on blockchain technology. The reason, why this platform sets itself apart from classic cryptos is the smart contract. These are programs that someone wrote directly on the blockchain. As a result, you can manage information and perform specified functions.

They have a public address. So everyone can see this address. A smart contract can also receive and store Ether. Thus, it is even possible to create several smart contracts that communicate with each other. They can also exchange information or Ether depending on the event.

Ethereum explained simply

So you could use them to manage monthly subscriptions. Therefore a user can send a monthly fee due directly. It checks the validity of the payment. As a result, the address of the transmitter is stored and noted as unlocked.

The difference between Ethereum and Bitcoin

Ethereum is a decentralized platform for digital contracts. So this includes an open peer-to-peer network using the blockchain technology. While Bitcoin can transfer money, Ethereum has way more use cases. It provides an infrastructure to operate decentralized applications and therefore allows us to create all types of Apps.

How does Ethereum work?

With Ethereum, it is possible to develop decentralized applications. They are based on smart contracts. The programming defines the functions written on a blockchain. Thus, it makes them accessible over the network. Therefore, interacting with a smart contract can initiate a specific function. The EVM executes the code on each network node. As a result the blockchain documents the transactions.

What is an Ethereum Virtual Machine (EVM)?

Like any program, smart contracts also require a runtime environment. So for our platform, we use the EVM. It can run on every node in the network and ensures the execution of the code.

Ethereum explained simply

All nodes always execute the same instructions. But there is an ongoing consensus across the blockchain. As a result, this makes the whole system slow-going compared to normal PCs. But it creates a high level of security for the network.

How does an Ethereum Account works?

So if you want to use Ether you need a wallet account. It has both a public address and a private key. You can use the public address to send Ether to your friends without worry. The private key is used to sign transactions. Thus, it is like your private signature and you should not publish it.

Ethereum explained simply

How does Ethereum mining work?

Building blocks involve a lot of effort. On Ethereum, a miner creates a new block every 10-15 seconds. Transactions related to smart contracts are written as transfers to the blockchain. If you want to execute a function, you also have to pay a small fee. Thus, just the readout of data from a smart contract is not considered a transaction. That is because nobody changes data.

What is a Ethereum Smart Contract?

A smart contract is a collection of computer code between two or more parties. This code is basically just a set of some if-clauses. So a Smart Contract runs on the top of a blockchain and consists of a set of rules. Both parties need to agree with these rules before you set up the smart contract. And because it runs on the blockchain, nobody can change it after you wrote the digital contract. When both parties fulfill these pre-defined rules, the smart contract executes itself to produce the output.

The smart contract is executed by nodes on the blockchain network. So, all nodes that execute the smart contract must derive the same results from the execution. Also, the results of the execution are recorded. As a result, everybody can look them up.

This piece of code allows us decentralized automation by facilitating, verifying, and enforcing the conditions of an underlying agreement. So smart contracts allow you to exchange anything of value. This could be money, information, shares, property and more. And because it runs on the blockchain, we don’t need third parties and can create transparency between contract partners.

What is Ether?

Ether is the cryptocurrency on the Ethereum Blockchain. It allows you to transfer money or pay transaction costs. In order to pay these small transactions, the costs of ether are divided into smaller units. Wei is the smallest unit with 0.000000000000000001 Ether. So this amount is well below the value of one cent. As a result, the costs are at near-zero cost.

“Ethereum explained simply” – Summarize:

  • It is not a cryptocurrency, it is a dezentralized platform.
  • So it includes an open peer-to-peer network using the blockchain technology.
  • It is a platform for Smart Contracts.
  • The cryptocurreny is called Ether.
  • Smart contracts determine the logic of a decentralized applications.
  • Blockchain documents all performed transactions.
  • The EVM executes codes on each network node.

We hope you like our article “Ethereum explained Simply”. If you want to be informed about the latest updates, follow us on Facebook, Pinterest and Steemit.

Stay current on your favorite topics

This Post Has 3 Comments

  1. Manish Mishra

    Great post About Ethereum! And you use really a great infographic to showcase the relationship between Smart Contacts and Ethereum

  2. Immanuel Kant

    Wonderful post about Ethereum! I always had a concern about Ethereum what is all about and what is the relationship with Smart Contacts. Now i have better idea about this.

Leave a Reply