Ethereum is an open-source software platform built on blockchain technology that allows software developers to design, productize and deploy decentralized applications (dapps, for short). These decentralized applications can take many forms that are still being explored today.
Ethereum shares similarities with Bitcoin, arguably the best-known cryptocurrency in the world. Note the Ethereum and Bitcoin cryptocurrencies rely on decentralized blockchain-based networks that are immutable (uneditable), secure and almost impenetrable from corruption given their respective cryptographic properties.
From here, the two cryptocurrencies begin to diverge in how they can be used. The utility of Bitcoin is limited to serving as a medium of exchange for peer to peer financial transactions. In contrast, Ethereum seeks to serve as a decentralized ‘world computer’, democratizing the existing client – server model by storing identifying information on its impenetrable, distributed blockchain.
Imagine a consumer purchasing a piece of clothing online. When the consumer checks out, they will provide identifying information (i.e. name, credit card number) to the company in exchange for the piece of clothing. The company will then store this data on a server owned by someone else using software managed by even another vendor. This sequence, in short, illuminates i. that the personal information of consumers is no longer fully controlled by the consumer; ii. that the personal information of consumers is in the hands of many companies, which means iii. that there are many ways that personal information of consumers can be compromised without their knowledge.
Ethereum would reverse this relationship for the consumer by allowing them to share their encrypted personal information with vendors in a way that restores personal information ownership while preventing theft through an uneditable blockchain; in other words, if someone tries to manipulate their personal information in any way, the chain breaks and they worldwide system will be alerted.