Ethereum is a public blockchain currency and contract platform based on the same distributed asset culture as that of bitcoin. One of the fundamental difference is where bitcoin has incomplete scripting language Ethereum has virtual machine language which is implemented as executable white code in every single transaction. This is basis for the smart contract functionality enabling the peer-to-peer contracts.
Ethereum was initially proposed by Vitalik Buterin; with its release on 30 July 2015. The currency unit of the Ethereum platform is called ether. Like any other cryptocurrency, ether is traded on Ethereum platform. 5 ethers are created every block (roughly 15-17 seconds) to the miner of the block.
To do the mining of ether, the Ethereum network is kept running by computers all over the world. In order to reward the computational costs of both processing the contracts and securing the network, there is a reward that is given to the computer that was able to create the latest block on the chain. Every 12 seconds, on average, a new block is added to the blockchain with the latest transactions processed by the network and the computer that generated this block will be awarded 5 ethers. Due to the nature of the algorithm for block generation, this process (generating a proof of work) is guaranteed to be random and rewards are given in proportion to the computational power of each machine. This process is usually called mining in the crypto-currency lingo.