What is Ether
By now you probably have heard or read about cryptocurrency and the first decentralized digital currency Bitcoin. If so you have some knowledge about how this new online currency works. Then you probably would get what ether is.
No, we’re not talking about the volatile and highly flammable liquid. Instead, we are referring to the internal network unit called ether, which is used as the “fuel” to run a blockchain-based software platform called Ethereum.
The New York Times described Ethereum as “a single shared computer that is run by the network of users and on which resources are parceled out and paid for by ether.”
Considered as the second most valuable cryptocurrency next only to Bitcoin, Ethereum skyrocketed from $8 to $308 in November 2017, according to Forbes. That’s a staggering 3,700% growth in just over a year. But, just like every stock or investment, Bitcoin and Ethereum are also vulnerable to drop its prices and fall into a bear market.
In this article, you’ll learn more about Ethereum, how it differs from Bitcoin, and eventually, decide for yourself whether you want to invest in ether.
Who Runs Ethereum?
Part of learning more about Ethereum is to know the company and people who are behind it and the narrative behind its creation.
Ethereum was conceptualized by then 19-year old programmer Vitalik Buterin from Toronto, Canada. He was at that time; working on several Bitcoin projects and was inspired to create a blockchain that could support more universal computations. In July 2014, the Ethereum Foundation held an ether crowdsale where they sold 60 million tokens, 12 million of which was used to fund its development and marketing efforts through the Ethereum Foundation.
One of the critical differences between Bitcoin and Ethereum is that the former has developers and core team that work together on its protocol to expand the technology. Ethereum also has those but with a key figure, such as Buterin, who you can get feedback about updates on the blockchain.
Ether for Beginners
According to Ethereum itself, it is a decentralized platform that processes smart contracts, which are applications that run precisely as they were programmed without the possibility of fraud, censorship, downtime and third-party interference.
The apps run via custom-built blockchain, a shared global infrastructure which can influence its value and represent the possession of property. As such, developers can build and set up different decentralized applications.
So it’s just another Bitcoin? Sort of, but not entirely.
Borrowing the words of Ethereum co-founder Dr. Gavin Wood:
“Bitcoin is first and foremost a currency; this is one particular application of a blockchain. However, it is far from the only application. To take a past example of a similar situation, e-mail is one particular use of the internet, and for sure helped popularize it, but there are many others.”
In short, Bitcoin used the blockchain technology to create a currency that can be mined. Meanwhile, Ehtereum is exploring in other applications outside tradable currency.
During a segment of CNBC’s Fast Money, expert trader Brian Kelly has broken down the critical distinctions between Bitcoin and Ethereum.
Difference between Bitcoin and Ethereum
Aside from what was already mentioned, there are also other main differences which you should know between Bitcoin and Ethereum. They are:
- Ethereum is more than just a currency. It has a growing number of smart contract applications which is powered by ether as its crypto-currency. It’s also got other crypto-assets that can be managed through Ethreum Wallet.
- By using your cryptocurrency, you can implement smart contracts. Thus , allowing you to create digital tokens that can be used to represent virtual assets and shares, as proof of membership, forms of voting and many more. The contracts are compatible with exchanges that use the standard Application Programming Interface (API) coin.
- Ethereum is gearing to be the new Kickstarter. Ethereum has a platform where one can create new projects and gain pledges from the community directly and without any third party. This also takes out much of the rules and fees by such entities.
- Ethereum can Help you set up an Organizational Structure. As such, you can collect proposals and hold management votes from people who are backing your project. Thus, scraping the traditional paperwork and hiring of managers.
To further understand how Ethereum, Bitcoin, and other cryptocurrencies make up the so-called Cryptoverse, here’s an insightful infographic from Visual Capitalist.
Ethereum Virtual Machine
Today, Ethereum is a platform, with a bare-bones mechanism, where developers can build apps and interact on the network. It works on a runtime environment called the Ethereum Virtual Machine (EVM) which executes the network’s entire smart contract.
Ether is used by developers to fuel the production and fulfillment of these contracts in creating decentralized applications. Now you might be confused about what that is?
Simply put, Ethereum can be used to kickstart a project from gathering a crowdfund to pre-sell your product, to selling your virtual shares in the blockchain organization, and to auction a limited number of items.
By using Ethereum, all of the contracts mentioned above will have the contributor’s money put on hold until the given goal or date is reached. All this is made possible by that platform without the need of a centralized arbitrator.
Popular Apps in Etherium
You might be surprised with the variety and practicality of some of the apps being developed through Ethereum. According to State of the Apps, they have curated at least 866 decentralized apps from Ethereum which they distinguish in four stages as a concept, work in progress, prototype and live.
One of the most publicized apps is CryptoKitties, which is a game that allows users to purchase virtual cats. Its concept is like Pokemon collecting, but instead of battles its activity is primarily focused on breeding and auctioning your feline collection. So far, the game has had a transaction amounting to $2 million in real money.
Below are five more decentralized apps that are quite popular in Ethereum network:
- Etheria- their version of Minecraft, but is guaranteed to be unhackable and can’t be altered nor taken down as it is not owned by a major company.
- Early Tweet- functions like Twitter with messages that can’t be removed or altered once it’s published.
- Gnosis- is a voting platform that creates a prediction market for almost anything.
- Raiden Network- is a high-speed asset transfer that hopes to be Ethereum’s version of a seamless fund transfer service.
- TenX- further explores the use of ether as a currency at almost any point of sale in the world.
Ethereum is an innovative solution not only as a cryptocurrency but also as a platform to help solve some of our common problems using a unique platform. You could expect it to grow even more significant in the future as more users are drawn in to use its services.
We hope that this answered your question what ether is and how it is changing the world today.