This post is one of a series of posts I am writing where I try to apply the Feynman Technique to a number of different crypto token projects. You can find the rest here. None of this should be taken as investment advice. They are just meant to be simple introductions to the projects.
Ethereum is a platform for creating applications without the need of any single person or organization to run it. Instead Ethereum, like Bitcoin, runs on a network of computers that determine whether or not transactions on the network are valid.
The major difference between Ethereum and Bitcoin is that Ethereum allows for more advanced programs to be built on top of it. This is done through the use of smart contracts, which are just software code that can create their own rules for how transactions sent to it should work.
Any transaction on the network that is sent to a contract runs the code for that contract. This enables anyone to create simple or complex programs on top of it, allowing for an unlimited amount of different applications to be created, without the need of your own computers to run the code. Some of the most common types of applications are financial and governance.