Ethereum - Money with "instructions"

If Bitcoin is like digital gold (something valuable you store and send), Ethereum is like a global computer that never turns off. While Bitcoin is mainly used to move value, Ethereum allows that value to have rules.

1. What does it mean for money to be "programmable"?

Imagine you lend $10 to a friend. Normally, you have to trust them to pay you back. Now imagine you could "program" those $10 so that if your friend doesn't pay you back in a month, the money automatically returns to your account. That is programmable money.

In Ethereum, this is done through Smart Contracts. Although the name sounds complicated, they are neither legal contracts nor are they intelligent; they are simply code instructions that say: "If A happens, then do B".

2. Ethereum: The bank that doesn't need bankers

Thanks to these contracts, we can emulate almost any service of a traditional bank but automatically and without intermediaries:

• Loans: You can take out a loan by putting up your crypto as collateral without talking to anyone.

• Conditional payments: Money is only released if a condition is met (like a package arriving at your house).

• Exchanges: You can swap one currency for another without needing a company to act as an intermediary.

3. "Money Legos"

The coolest part about Ethereum is that it’s like a box of Legos. Since everything is open-source and transparent, a developer can take one piece (a lending protocol) and connect it with another (an exchange protocol) to create a new financial product. This ease of building on top of what already exists is the foundation of DeFi (Decentralized Finance).

In short: If Bitcoin is the network for secure savings, Ethereum is the network for action and creation. It is the infrastructure on which the financial system of the future is being built.