Ethereum. It’s the second-largest cryptocurrency by market cap. Its founder Vitalik Buterin is somewhat of a celebrity in the space, and the Ethereum blockchain has been used to spark thousands of cryptocurrency projects over the past +5-years.
It is one of the many cryptocurrencies we offer on our platform here at Coinberry. But what is it and why is it so important?
In this article we’ll cover the basics of Ethereum, and give you the essentials behind why this cryptocurrency is shaping the future of the blockchain world.
What Is Ethereum?
At the fundamental level, Ethereum is similar to Bitcoin in that it is used as a medium of exchange, but is different in that Ethereum is engineered to be programmable, whereas Bitcoin is not.
Ethereum, considered second only to Bitcoin in market capitalization, is a decentralized, open-source blockchain protocol. It has its cryptocurrency called Ether or ETH (sounds like ‘ee-th’), which is generated by the Ethereum protocol as a means of exchanging value on the network and as reward to pay miners to support the Ethereum network. The miners, who offer their computing power to verify transactions on the Ethereum blockchain and to keep the network running get paid in ETH to do so.
Ethereum coins itself as “the world’s programmable blockchain”, and quite rightly so. It was the first fully programmable blockchain network which has allowed anyone to copy and re-program the Ethereum code into a wide range of services and products. As such it has acted as the backbone for decentralized financial services, tools for games, NFTs and more.
The applications that can be developed with Ethereum as the backbone, allow transactions to be facilitated with its currency, Ether. In this respect, it is intended to be much more than Bitcoin and many other crypto-currencies, which are simply a store of value and/or medium of exchange.
As you’ll soon see, Ethereum has led to the development of entire industries in the crypto-space, including thousands of decentralized apps (dapps), billions held in decentralized finance (defi), astronomical valuations with NFTs (Non-fungible tokens), and much much more.
But in order to really understand how these have all come about, we’ve got to start with the basics. What is the difference between Ethereum and Ether (or ETH).
Ethereum VS Ether
Ether (sometimes also referred to as Ethereum in general, or ETH) is the cryptocurrency that runs on the Ethereum blockchain. One can use ETH to buy and sell goods and services on the Ethereum blockchain. ETH, like any other digital currency, can also be used as an investment or as a store of value.
ETH as a cryptocurrency is one of the highest rated cryptocurrencies by market capitalization, and has seen tremendous growth over the years, as shown in the graph below.
ETH reached an all-time high of $4,196.63 USD on May 10, 2021 ET, according to Coin Metrics, and at the time of this writing, continues to push all time highs in terms of price.
Ethereum on the other hand, is a decentralized computing network built on blockchain technology. As mentioned above, ether, the cryptocurrency that is used on the Ethereum blockchain, is fundamental to the operation of the network but is different from the underlying network itself.
The Ethereum blockchain (network) can be used to create a variety of applications, products and services.
The Ethereum network has seen constant developments and improvements over the years. With a very strong community, and constant improvements, Ethereum is one of the longest standing blockchain networks that companies have continued to build on.
Vitalik Buterin conceived the idea for the Ethereum framework in 2013 at the age of 21. Having been involved in the Bitcoin community he was aware of blockchain fundamentals but wanted to make significant improvements to the structure. Having spent the better part of two years working on the Ethereum project, the network went live in 2015. It has since become the second most popular cryptocurrency after Bitcoin.
Vitalik recounts on a Wired.com interview, his inspiration behind Ethereum:
“I saw everything to do with either government regulation or corporate control as just being plain evil. And I assumed that people in those institutions were kind of like Mr. Burns, sitting behind their desks saying, ‘Excellent. How can I screw a thousand people over this time.’
The founding idea behind Ethereum was to create a new cryptocurrency that did not have the limitations of Bitcoin. The vision was to develop a framework that could enable developers to build and publish smart contracts and distributed applications (dapps), all while leveraging the benefits of blockchain and cryptocurrency that Bitcoin had created.
According to the Ethereum Foundation, its framework can be used to “codify, decentralize, secure, and trade just about anything.”
Vitalik’s whitepaper on Ethereum showcases his early visions to have Ethereum spark development in a wide range of different directions. This has come to life over the years, where Ethereum has been used to create fungible and non-fungible tokens, decentralized applications (dapps), decentralized finance (defi), decentralized exchanges (DEXs), and decentralized autonomous organizations (DAOs).
Ethereum is at the core of many of these variations of blockchain, and continues to spark innovation across the board.
The Ethereum Network And ETH Today
Ethereum has started to implement a massive update to the way in which their blockchain works, moving from one system (proof-of-work) to another (proof-of-stake). While the details of this are for another article, the Ethereum Foundation believes this will speed up transactions and lower transaction costs, a common complaint of those who regularly use the network.
Ethereum currently sits at the number two spot in cryptocurrency market cap, with a total network valuation of over $350-billion USD.
With one of the largest communities in the cryptocurrency space, and a vast number of updates scheduled, Ethereum may continue to be one of the leading blockchains developers and companies turn to.
Ethereum is one of the cryptocurrencies we offer on the Coinberry platform. You can sign-up to trade it if you so choose, or take a look at the latest Ethereum price point in our application.
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