The Wild West age of cryptocurrencies has begun. One coin in particular is second in today’s modern digital gold rush. As new decentralized forms of payments take off there are still many people out there who will ask, “What is Ethereum?”.
Is it just another form of Bitcoin?
This coin is a cryptocurrency similar to Bitcoin. But it has some interesting nuances included. Those nuances are what make it a powerhouse in this new Wild West of decentralized money.
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The Ethereum coin, also known as Ether, or ETH, was the brainchild of Vitalik Buterin. He is a programmer hailing from Russia. His idea was to form a better Bitcoin. The strategy was to target other programmers with his idea. He wanted to make a superior cryptocurrency.
The first iteration was a program called Frontier. This was the infancy of ETH. Frontier was directly downloaded from the website and hardly looked like a coin. Nevertheless, it was a digital coin and enjoyed the second initial coin offering, or ICO, of all time. It raised approximately $2.3 million dollars in twelve hours of existence. Five years later it has a value of $160 dollars. It also has the second-highest market capitalization in the cryptocurrency world.
The letters ETH are the official lettering to represent the monetary aspect of Ether. But ETH is also divided up into inter-related details that do not necessarily relate to money. One of those is smart contracts.
Smart contracts are agreements validated by blockchain technology. The internet becomes the mode of validation of a contract without the need for a trusted third party.
This inherent ability to be more than just a form of money is what differentiates ETH from Bitcoin. This is the original intent of Vitalik Buterin and it seems to be working very well. Ether is more than just about money.
Ether is a global digital medium of exchange. It relies on a decentralized network to function using secure public-private key cryptography. It is written using open source software. This allows any programmer to contribute to the Ethereum cryptocurrency.
Ethereum versus Bitcoin
ETH and Bitcoin have related base operations. ETH branches out significantly after its basic use as money. Taking a look at the details of these cryptocurrencies, we see they have these details in common:
- Use a distributed digital ledger called blockchain.
- Are digital currency.
- Have similar scaling projects.
- Are gaining in value compared to the US dollar.
- Both use the proof of work protocol in validating blocks.
- Both incur network upgrades, which some call forks.
- Both use encrypted networks to ensure security.
ETH also branches out in its ability to inspire video games. Encrypted video games are made with Ether. The internet’s favorite animal has been created using Ether tokens. A decentralized video game with cats has been created from the Ethereum cryptocurrency.
Nothing like this has yet to be invented in the Bitcoin realm.
A new browser has spawned from the Ethereum cryptocurrency. It is called Brave and uses the Basic Attention Token, or BAT, to create ad revenue for website owners. BAT is an Ethereum token. Bitcoin has nothing like this in the works.
The Ethereum virtual machine
Another project that aims to simplify making smart contracts has been created. It is inside ETH.
This Virtual Machine, or EVM, is a machine within all nodes in the ETH network. The EVM helps programmers learn how to create smart contracts. It also creates a secure environment for those contracts.
Denial-of-service attacks can happen on the ETH network, and the EVM has been designed as a tool to prevent it.
ETH is destined to run globally on computers, so an easy way to think of the EVM is to call it an upcoming world computer. Therefore, the EVM is at the heart of understanding the answer to the question, “What is Ethereum?”.
Legal contracts are now validated by the power of math and modern programming.
ETH is this platform on which to build what lawyers have been accustomed to doing in the past. Business is set to be revolutionized by the upcoming utility of smart contracts. To explain what a smart contract is, think of a group of two or three people.
They have decided to get a house built but to each person’s expectations. Each person will have conditions to fulfill before the house is completed. These conditions now can be completed online using the Ether network.
Another example is a lock that opens with two or three keys, but only if all keys are inserted at the same time. A smart contract will automatically execute once all conditions are met. Computer code will determine the details of this process.
The blockchain is where much of it will be written. Security is guaranteed for digital contracts via the strong encryption used. The results of the agreement are not able to be censored by outside sources.
Smart contracts and video games are now applications on the Ether network. Insurance policies are as well. The Ether network is poised to affect many walks of life.
The keyword that covers them all is the word decentralized. All applications built on the Ethereum cryptocurrency have no central point of weakness. They are sent across the world via the internet to the many thousands of computers that run ETH.
The duplication aspect means it is less likely anyone will ever lose a program. Applications on the Ether network use the acronym DApp. DA stands for decentralized application.
The price-performance of Ether has been stellar. At the first of this year, we had an all-time high of $1,432 dollars, USD. Market conditions regulate the value of ETH, as they do all major cryptocurrencies.
The fiat value of ETH changes regularly. The blockchain itself has its own type of performance. This is an area that needs improvement. Transactions need to approach real-time levels. This is being worked on and is expected to have beautiful results soon.
The capacity and speed of the network will be improved tremendously. The new work of Vitalik Buterin and Joseph Poon is making it so as of this writing.
How to buy and trade ETH
The recommended place to buy and trade the Ethereum coin is the Binance Exchange. Like ETH, Binance was built as a decentralized application. It is an exchange that can run on different devices.
Smartphones running Android or IoS software can download the app. Coinbase and Binance sell ETH on their exchanges. Further technical analysis can be done using the TradingView platform. This is where a trader can get a more detailed look at the Ether market.
Ethereum versus Bitcoin
- They both are used as money.
- They both use the Blockchain.
- Both increase in value compared to the US dollar.
- They are both validated through proof of work.
- Both use encrypted networks.
- Ethereum is used to validate everything (like contracts), not just money and is involved in projects like Brave, the browsers that protects your privacy and rewards you with cryptocurrency to watch advertisement.