Ethereum is a type of blockchain network. The Bitcoin and Ethereum blockchains differ primarily in purpose and capability.
While the bitcoin blockchain is used to track ownership of the digital currency bitcoin, the Ethereum blockchain can be used to build
decentralized applications. The virtual currency associated with Ethereum is called Ether.
How Ethereum works?
Ethereum wants to be a 'World Computer' that would decentralize (some would argue, democratize)the existing client-server model.
With Ethereum, servers and clouds are replaced by thousands of so-called "nodes" run by volunteers from across the globe (thus forming a "world computer").
The vision is that Ethereum would enable this same functionality to people anywhere around the world, enabling them to compete to offer services
on top of this infrastructure.
Currently our choice of apps is of course also governed by third parties, as Apple and Google maintain and curate
(or in some cases, censor) the specific apps you are able to download. Ethereum can be considered a decentralised
application store that would return control of the data in these types of services to its owner and the creative rights to its author.
The DAPS - Decentralised Applications in the form of Smart Contracts written in a smart contract-specific programming languages are compiled
into 'bytecode', which a feature called the 'ethereum virtual machine' (EVM) can read and execute. All the nodes execute this contract using their EVMs.
What is Ether?
Ether is the primary internal cryptographic token of the Ethereum network. Ether is used to pay transaction and computation fees for
smart contracts that get executed on the Ethereum platform.
How will Ethereum combat centralisation of mining pools?
There are two primary ways that the Ethereum PoW based consensus algorithm combats mining centralization (Source).
The first is by reducing losses due to orphaned blocks, which independent miners are more likely to experience.
This portion of the Ethereum mining algorithm, a technique referred to as GHOST, includes the headers only of recently orphaned
blocks in return for a reduced reward to both the block producer and the includer of the (otherwise orphaned) block.
These included orphans from ‘grandparent’ or earlier blocks are frequently referred to as ‘uncle’ blocks because
the gender neutral term ‘ommer’ is not widely known or understood. The second way that the Ethereum PoW consensus algorithm
combats mining centralisation is by its use of a Proof of Work function that is ASIC resistant. By preventing mining from becoming dominated
by specially designed and produced hardware, independent miners are kept competitive or even given an advantage in terms of their profits and/or
levels of hardware investment, because they can make use of readily available commodity hardware (i.e. consumer graphics cards).