What is Ethereum? What is Ether?
Ether is the second most popular cryptocurrency after Bitcoin. In this article, you will find out what Ethereum is, what Ether is, how Ether is mined, what the differences are between Ethereum and Bitcoin, and how you can trade the second-largest cryptocurrency – Ether.
What is Ethereum, what is Ether, and where is the difference?
Ethereum is a whole cryptocurrency ecosystem based on blockchain technology. It allows the creation of decentralized applications through so-called “smart contracts”. Ethereum is not just a means of payment, but a whole financial ecosystem.
Ether is simply the cryptocurrency used for payments in the Ethereum ecosystem. Often the two are confused, but remember that Ether is the cryptocurrency and Ethereum is the whole system.
What is the difference between Ethereum and Bitcoin?
Ethereum, like Bitcoin, is based on Blockchain technology, and Ether can be used for payments, just like Bitcoin. This, however, is where most similarities between the two most popular cryptocurrencies end.
- Bitcoin can only be used as a currency to store and transfer value.
- The Ethereum ecosystem offers the option to “program” money, create new cryptocurrencies using the Ethereum blockchain, and even entire applications. All this is possible through “smart contracts”, which are an integral part of the Ethereum ecosystem.
Other key differences between Bitcoin and Ethereum are:
- The total amount of Bitcoins that will ever exist is 21 million, while the growth of Ether is limited to a certain amount each year, but so far there is no specific final number of Ether to ever exist.
- The processing time of a block, with Bitcoin, is 10 minutes, while with Ether, transactions can be completed in just 12 seconds.
What are smart contracts?
A smart-contract is a computer code that is executed on the Ethereum blockchain and facilitates the exchange of money, content, property, shares, and everything that has measurable value. This code is executed automatically when certain conditions are met.
What is the application of smart contracts in the real world?
If everything still seems complicated and unclear to you, here is a real-world example:
Let’s say you want to sell your apartment. This process is usually accompanied by an awful lot of bureaucracy and involves many third parties, such as:
- a broker to represent you and find a buyer,
- a lawyer to monitor the process and prepare the documents,
- a notary to draw up the deed,
- a bank through which to make the money transfer between buyer and seller,
- a government institution, which keeps records of the deals and property owners.
Ethereum can make this process much faster and simpler.
Through Ethereum, you can create a smart contract where the contract clauses are regulated with several lines of code. When the contract is published on the Ethereum blockchain, it cannot be changed.
When all the conditions set in the code are met – the contract is automatically executed and the funds are transferred from the buyer’s wallet, directly to the seller’s wallet.
- we do not need a notary because the contract is validated automatically and cannot be forged,
- we do not need a bank, as the payment is made In Ether in just 12 seconds, and the price of the property is one of the terms of the contract,
- we do not need a property register, because all the information about the transaction, as well as the new owner can be recorded on the blockchain.
Who created Ethereum?
The Ethereum ecosystem was created by the Russian programmer Vitaly Dmitrievich Buterin (known as Vitalik). In 2013, the ecosystem was presented as a project, and in 2014 a first of its kind online fundraising took place via Bitcoin. The project raised an impressive $ 2.3 million (then 3,700 Bitcoins) in just the first 12 hours of the public offering, and so the project became a reality 2 years later, on July 30, 2015.
How is Ether mined?
Ether, like Bitcoin, is created by independent individuals and companies that verify blockchain transactions using their computers. This process is known as “mining”.
The word “mining” comes from the context of the analogy of cryptocurrencies with gold, as both are finite. The only way to increase their quantity in circulation is to “mine” more of them. You can read more on the topic here.
In short, anyone can use their own computer to mine Ether. Like gold, mining Ether can be a business. You’ve probably seen pictures of so-called “farms,” which are huge warehouses full of graphics cards.
Ether – the cryptocurrency
As already mentioned, Ether is a cryptocurrency, and Ethereum is the whole ecosystem behind it. The two are often confused.
The cryptocurrency Ether is abbreviated ETH and can be traded on most cryptocurrency exchanges, including Finansiv.
In 2017 Ether’s price rose from 7 euros at the beginning of the year to a staggering 700 euros at the end of the same year.
You can follow the current Ether price here.
How to get Ether?
You have two options to get Ether, namely:
- to become a miner and mine your own Ether,
- to exchange other currencies for Ether, using a regulated exchange, such as Finansiv.
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The most important things about Ethereum and Ether
What is ETH?
ETH is the abbreviation for Ether on cryptocurrency exchanges.
What is Ethereum, in short?
Simply put – an ecosystem with programmable money that can be used for automatic transfers of property or value, without intermediaries or third parties, through “smart contracts”.
Is Ethereum a cryptocurrency?
No, Ethereum is a whole ecosystem, and Ether is the cryptocurrency which is part of it.
What is the current price of Ether?
You can follow the current price of Ether here.