WHAT IS ETHEREUM? In the Ethereum universe, there is a single canonical computer (called the Ethereum virtual machine or EVM), with the state of which the entire Ethereum network is consistent. Each participant of the Ethereum network (each Ethereum node) stores a copy of the state of this computer. In addition, any participant can broadcast a request to this computer to perform arbitrary calculations. Every time such a request is broadcast, other network participants check, confirm and produce ("execute") calculation. This "execution" causes a state change in the EVM, which is captured and propagated throughout the network.

Calculation requests are called transaction requests; a record of all transactions and the current state of the EVM is stored in the blockchain, which, in turn, is stored and negotiated by all nodes.

Cryptographic mechanisms ensure that once transactions are confirmed as valid and added to the blockchain, they cannot be changed. Also, these mechanisms ensure that all transactions are signed and executed with the appropriate "permissions" (no one should be able to send digital assets from Alice's account, except Alice herself).

WHAT IS ETHER? Ether (ETH) is Ethereum's own cryptocurrency. The purpose of ether is to create a market for computing. Such a market provides participants with an economic incentive to verify and execute transactional requests and provide computing resources to the network.

Any participant broadcasting a transaction request must also offer the network a certain amount of ether as a reward. This award will be awarded to those who will eventually perform the work of verifying the transaction, executing it, fixing it in the blockchain and broadcasting it to the network.

The amount of ether paid corresponds to the time required to perform calculations. Such rewards also prevent attackers from intentionally clogging up the network by requesting the execution of infinite calculations or other resource-intensive scenarios, since all participants must pay for computing time.

WHAT ARE SMART CONTRACTS? In practice, participants do not write new code every time they want to request a calculation in EVM. Instead, application developers load programs (reusable code snippets) into the EVM structure, and users make requests to execute these code snippets with various parameters. We call such programs downloaded and executed by the network smart contracts.

At the simplest level, you can imagine a smart contract as a kind of vending machine: a script that, when certain parameters are called, and also if certain conditions are satisfied, performs some actions or calculations. For example, a simple smart contract of a supplier can create and transfer ownership of a digital asset if the requesting transaction sends the ether to a certain recipient.

Any developer can create a smart contract and publish it on the network using the blockchain as a data layer, for a commission paid to the network. Then any user can call a smart contract to execute its code, again for the commission paid to the network.

Thus, with the help of smart contracts, developers can arbitrarily create and deploy complex user applications and services, such as trading platforms, financial instruments, games, etc.

TERMINOLOGY Blockchain The sequence of all blocks recorded in the Ethereum network throughout its history. It is so named because each block contains a link to the previous block, which helps us to save and organize all the blocks (and, consequently, the entire detailed history).

ETH Own cryptocurrency of the Ethereum network. Users pay ether to other users for executing their code execution requests.