Bob. In Ethereum, however, its possible to create a contract that says send one ether to bob if the date Contracts in Ethereum should not be seen as something that should be fulfilled or is 25th October 2017 and Bobs current balance is more than 20 ether. complied with; rather, they are more like The cool thing about smart contracts is that they selfautonomous agents that live inside of the execute exactly as designed by their creators once certain conditions are met. And this is just a simple THE MECHANICS: HOW DOES ETHEREUM WORK? 19 example. Creating a smart contract with infinitely The Ethereum Virtual Machine more complicated conditions is possible as well. Smart contracts are powered by the Ethereum A smart contract, could, for example, facilitate the

Virtual Machine (EVM) and by Ether. The EVM automatic transfer of ownership of a property after includes a Turing complete scripting language which a number of critical conditions are met. All of this means that it can solve any computation problem. without any human involvement. Crazy! The EVM turns Ethereum into a programmable That all sounds pretty impressive, right? But how blockchain, keeping all the smart contracts running does Ethereum enable smart contracts to run and on time and coordinating them with the rest of execute? the network. In doing so, the EVM enables the development of potentially thousands of different applications all on the Ethereum platform. THE MECHANICS: HOW DOES ETHEREUM WORK? 20 What is Solidity? tradeable cryptocurrency. Ethereum has its own programmable language called In Ethereum, Ether is used by developers to pay Solidity which is similar to JavaScript. It enables

Every computation on the platform as a Ethereum and is designed to enhance the Ethereum result of a transaction has a fee, and the more you Virtual Machine (EVM). need to store the more is paid. This is because computations and file storage What is Ether? place a strain on the network. So, fees are there to discourage developers from excessively using the In the Ethereum blockchain, instead of mining for network. Without fees to drive users actions, the bitcoins, miners work for Ether. Ether is a necessary Ethereum network simply couldnt function. So, element for operating the Ethereum network. think of Ether like the crypto-fuel that powers the Its like a fuel that provides an incentive to ensure

Ethereum network. developers write quality applications and the network runs smoothly. Beyond a fuel that enables decentralized applications to run, Ether is also a THE MECHANICS: HOW DOES ETHEREUM WORK? 21 How are ethers created, who needs them, and is the supply unlimited? Developers who build decentralized applications (Dapps) on the Ethereum platform, as well as users Ether gets issued at a constant rate through the who want to interact with smart contracts, will need block mining process. This rate along with the total Ether. supply of Ether was decided during the 2014 presale. 60 million Ethers were purchased by in the 2014 Proof of Work (PoW) Reaching consensus on Ethereum crowdfunding campaign. For a decentralized system like Ethereum to operate Another 12 million went to the Ethereum without any central intermediary, there needs