Regardless of the efforts made from the steps-mentioned altcoins in addressing some part of the Bitcoin's limitations, there are several fundamental issues that are not being addressed yet:

• Bitcoin and these altcoins are specific to one purpose: trading either BTC or an altcoin.
• Although a programmer can use tools such as BitcoinJS to interact with the network, the resulting code sits outside of the blockchain and is not guaranteed to run. The chain itself does not have a Turing complete programming language for coding directly on a blockchain.
• These blockchains are stateless and one has to search through the entire ledger to find an answer such as the total number of BTC minted.

In response to these problems, Vitalik Buterin, a Canadian cryptocurrency researcher and programmer, proposed the idea of Ethereum in late 2013. Funded by an online crowdsale, the system went live on 30 July 2015, with 11.9 million coins premined for the crowdsale.

The core idea for Ethereum was to build a general-purpose blockchain so users could solve a wide range of business problems not just limited to cryptocurrency transfer. Ethereum introduced a few new and critical concepts:

• The concept of saving a smart contract on a blockchain
• The concept of implementing a smart contract with a Turing complete programming language such as Solidity and running the piece of code on the blockchain

Solidity was initially proposed in August 2014 by Gavin Wood. The Ethereum project's Solidity team led by Christian Reitwiessner later developed the language. It is one of the five languages, (Solidity, Serpent, LLL, Vyper, and Mutan) designed to target the Ethereum virtual machine (EVM).

Nick Szabo, a programmer and lawyer, initially proposed the term smart contract in 1996. In his blog, Nick Szabo described it as the granddaddy of all smart contracts, the vending machine.
A vending machine shares the exact same properties as a smart contract on a blockchain today. A vending machine is built with hardcoded rules that define what actions to execute when certain conditions are fulfilled, for example:

• If Susan inputs a dollar bill in the vending machine, then she will receive a bag of pretzels.
• If Tom puts in a five-dollar bill, Tom will receive a bag of pretzels and also change of four dollars.

In other words, rules are defined and enforced by a vending machine physically. Similarly, a smart contract contains rules in program code that are run on the blockchain and triggered when certain conditions are met.

The introduction of the smart contract concept is significant:

• A smart contract is a scripted legal document.
• The code built into the contract is stored on the Ethereum blockchain and cannot be tampered with or removed. This greatly increases the credibility of the legal document.
• This code cannot be stopped, meaning any party—regardless of how powerful the party is—cannot order or interfere with the running of the smart contract code. As long as certain conditions are met, the code will run and the legally defined actions will be fulfilled.
• Ethereum to blockchain is like an OS to a computer. In other words, the platform is generic, no longer serving only one specific purpose.
• It now has a Turing complete language: Solidity.