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What is Ethereum?

Jesse
4 mn

You've likely heard about this powerhouse cryptocurrency, but do you know what it really is? In this article, we're exploring what Ethereum is and what use case it provides to the blockchain industry. Spoiler alert: a big one. As the second biggest cryptocurrency and currently holding over 20% of the market share, now is an excellent time to learn about Ethereum.

What Is Ethereum?

Ethereum is a blockchain platform that allows developers to create their own decentralised applications (dapps) and smart contracts. With the intention to build the blockchain industry, Ethereum provides a platform for anyone from any sector to incorporate blockchain into their business and harness the power of decentralised technology.

Smart contracts are digital agreements that automatically execute when the predetermined criteria have been met.

Using a decentralised network of computers to maintain and operate the network, much like Bitcoin, Ethereum is a computing platform. The network also allows for the digital transaction of value/money, as well as facilitating the creation of new cryptocurrencies.

What Is ETH?

ETH, also known as Ether, is the digital currency that fuels the Ethereum network. Ethereum refers to the platform as a whole. When someone refers to the Ethereum price, they are actually referring to the price of ETH.

How Does Ethereum Work?

The platform is currently transitioning from a Proof-of-Work consensus to a Proof-of-Stake model which will change the way that Ethereum works. While both will remain decentralised networks with ETH as the native currency, the way in which the network is operated will change significantly.

In the PoS model, the network will rely on validators (instead of miners) to confirm and execute transactions, with each validator needing to stake a certain amount of ETH in the network in order to participate. Staking involves locking ETH in the network, and acts as surety that the validators will act with best intentions.

Using blockchain technology, all transactions are stored in the transparent public ledger, with each block storing the data kept in chronological order.

What Gives Ethereum Its Value?

Ethereum is currently the largest platform on which dapps and smart contracts can be created, and the most widely used. With strong leadership and an impressive community of developers behind the project, Ethereum has gained a reputation for being reliable, innovative and a positive force in the blockchain industry.

In terms of ETH, the cryptocurrency gains value through supply and demand. A small portion of ETH is also used to pay "gas fees" which allow any transactions on the network to take place.

How Is Ethereum Different From Bitcoin?

When comparing the first and second biggest cryptocurrencies one must first understand that the two networks provide two different functions. While they can both be used as a medium of exchange, facilitating BTC and ETH transactions around the world in minutes, their primary use cases differ substantially.

Bitcoin was designed to provide a digital payment system that is free from any centralised control. The network provides peer-to-peer payments as well as a strong store of value, as the Bitcoin price has proven over the last several years.

Ethereum on the other hand was created to provide a computing platform on which people could create new decentralised applications on top of blockchain technology. The platform's intentions are to build the blockchain industry, allowing anyone interested to take part.

What Is Ethereum Used For?

Ethereum is most prominently used for the creation of dapps and smart contracts, however, users can also transfer value through the platform (ETH acting as a digital currency). ETH has also proved to be a valuable store of value, with many investors buying the token anticipating returns over a certain time period.

Who Founded Ethereum?

The idea of Ethereum was initially fleshed out in 2013 by a young crypto enthusiast, Vitalik Buterin in a blog post. He joined forces with several developers and entrepreneurs and started building the decentralised platform in late 2013.

According to one of the founders, the initial founders of the decentralised platform were Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie and Amir Chetrit in December 2013. With Joseph Lubin, Gavin Wood, and Jeffrey Wilcke joining in early 2014.

In 2014 a successful crowd sale was launched, selling 72 million ETH and raising around $18 million. The platform officially launched on 30 July 2015.

How Do You Buy Ethereum?

If you'd like to invest in Ethereum, you will need to purchase ETH through a trusted crypto exchange platform. The Tap app provides users with several convenient payment options as well as an Ethereum wallet in which users can securely store the cryptocurrency.