Ethereum is often described as a "world computer" because, unlike Bitcoin, it wasn't designed only to move a currency around - it was designed to run arbitrary programs, called smart contracts, in a way that anyone can verify and no single party can unilaterally shut down or alter.

At the heart of Ethereum is the Ethereum Virtual Machine (EVM), a standardized runtime environment that every node on the network runs. When a smart contract executes, it runs identically inside the EVM on thousands of independent computers, and the network only accepts the result if enough of those computers agree on the outcome. That consistency is what lets people trust code running on Ethereum without trusting the individual who wrote it.

Smart contracts are simply programs stored on the blockchain that execute automatically when specific conditions are met - for example, releasing funds once both parties in a trade have deposited their side. They are the building block behind decentralized finance (DeFi) applications like lending and trading platforms, as well as NFTs (non-fungible tokens) and other decentralized apps.

Running a smart contract costs "gas," a fee paid in ETH that compensates the network for the computing resources a transaction uses. Gas exists partly to price scarce block space fairly and partly as a safeguard - without a cost attached, a buggy or malicious contract could loop forever and stall the network. More computationally demanding operations cost more gas.

Since an upgrade known as "the Merge" in September 2022, Ethereum has secured its network through proof-of-stake rather than energy-intensive mining. Validators lock up ETH as collateral and take turns proposing and confirming ("attesting to") new blocks, earning rewards for honest participation and facing penalties for going offline or acting dishonestly.

Put together, these pieces - the EVM, smart contracts, gas, and proof-of-stake validators - let Ethereum function as shared, programmable infrastructure: a base layer that individual developers and companies build applications on top of, rather than a service any one of them owns or controls.