What is Ethereum? It’s a combination of a cryptocurrency, like Bitcoin, and a vast decentralized computer. Bitcoin’s contractual language is quite limited, by design. But it allows for transactions that can be delayed until a particular time; or transactions that occur only if, say, 3 of 5 signatories agree to them; or crowdfunding campaigns that only transfer money if a particular total is attained; and many other possibilities.
Importantly, once incorporated into the Bitcoin blockchain, these contracts require no trust and no human intervention. Bitcoin is programmable money … with a highly restrictive programming language. Ethereum removes those restrictions entirely.
The Ethereum scripting language is Turing-complete, meaning it can replicate any program written in any traditional programming language. However, to prevent ill-behaved contracts with infinite loops from running forever, every Ethereum transaction computation must be paid for. Just as Bitcoin miners collect small amounts of bitcoin, known as “fees,” in exchange for mining transactions onto the Bitcoin blockchain, Ethereum miners collect “ether,” the Ethereum currency, for running Ethereum contracts.
You may well be thinking: “Oh come on. Bitcoin was more than abstruse and geeky enough. Now this new made-up-magical-money thing is even more complicated? Why should I care?” You should care because decentralized cryptocurrencies like Bitcoin and Ethereum are–or at least could be–essentially an Internet for money, securities, and other contractual transactions. Like the Internet, they are permissionless networks that anyone can join and use. Ethereum optimists might analogize Bitcoin as the FTP of this transactional Internet, with Ethereum as its World Wide Web.
Microsoft offers “Ethereum Blockchain As A Service” on Azure. Ether has risen in value more than tenfold over the last year, to a market cap which now exceeds $1 billion. What is the DAO? It stands for “Decentralized Autonomous Organization.” Ethereum offers a tutorial explaining how to create your own.
Think of it as a kind of corporation incorporated only on the Ethereum blockchain, whose laws consist entirely of those defined by its contract code. A corporation that appears to be a means of investing in the future … without having any concrete idea exactly what that future is yet. For many people, that kind of investment is a holy grail.