In the beginning, there was Bitcoin.
It stood alone as the sole blockchain and was designed as a digital, peer-to-peer alternative to cash. Instead of relying on banks, Bitcoin is run by a network of miners who are responsible for validating transactions and syncing the network at all times.
Along came Ethereum and took the idea of blockchain one step further with the introduction of smart contracts. Essentially, a smart contract is a piece of software that executes automatically when certain conditions are met. Think of it as a binding legal agreement that requires no lawyers or judges to enforce.
For example, a crowdfunding smart contract could collect funds from investors, invest that money into different projects and payout the investors in proportion to their contributions, all without any human involvement.
Smart contracts are revolutionary because they form the foundation of Ethereum’s vision to become a ‘world computer.’ No longer is the function of blockchain limited to sending and receiving transactions, but also developers can now create a whole new universe of decentralized applications thanks to smart contracts.