Where Bitcoin could be likened to a calculator—powerful and revolutionary for a single, specific task—Ethereum emerged as a global smartphone: a versatile, programmable platform capable of running a vast array of applications. Introduced in a 2013 whitepaper by Vitalik Buterin, Ethereum's core innovation was to transform the blockchain from a simple ledger for money into a foundational layer for a new, decentralized internet, earning it the nickname "the world computer" (Di Maggio, 2025).
The key to Ethereum's power is the **smart contract**. First conceptualized by Nick Szabo in 1996, a smart contract is a self-executing agreement with its terms written directly into code. While the idea was old, it was Ethereum that provided the practical technology to make it a reality.
These contracts run on the **Ethereum Virtual Machine (EVM)**, an abstract computer that operates on every node in the Ethereum network. This ensures that smart contracts run exactly as programmed, without any possibility of downtime, censorship, or third-party interference. They automatically execute, control, and document legally relevant events according to the rules of the agreement, removing the need for traditional intermediaries like banks or lawyers.
The unique power of smart contracts comes from a few key features that are guaranteed by the blockchain:
The fundamental difference between Bitcoin and Ethereum can be seen in their programming languages. Bitcoin uses a simple, stack-based language called **Script**. It was purposely designed to be limited in functionality (not "Turing-complete") to maximize security and prevent complex bugs. It is excellent for its purpose: validating financial transactions.
Ethereum, however, uses a high-level, "Turing-complete" language called **Solidity**. This means it can theoretically perform any computation, given enough resources. This robust framework is what gives developers the tools to build the wide array of decentralized applications (dApps) that make up the Ethereum ecosystem, from decentralized finance (DeFi) to gaming and digital identity (Di Maggio, 2025).