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Ethereum is the number two cryptocurrency in the world, as ranked by Coin Market Cap. But what is Ethereum? How does it differ from Bitcoin, and who created it? We seek to answer all the big questions here.
What is Ethereum?
According to the Ethereum website, it is “a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.”
Like Bitcoin, Ethereum is a distributed public blockchain network. However, tech-wise and purpose-wise, it differs considerably from Bitcoin as its primary function is to act as a blockchain upon which other applications can be built. Many of the world's top cryptocurrency companies (around 43 of the top 100) are built on the Ethereum blockchain, such as EOS, Populous, OmiseGo, Augur, and Salt.
The Ethereum coin or token is called 'Ether' (ETH) and is a token that "fuels" the network. It differs from Bitcoin because it's has a utility - it's not just digital currency. Ether is used by application developers to pay for transaction fees and services on the Ethereum network.
How does it work?
Blockchain technology, as a rule, is pretty technical and complicated stuff, and the average end-user of it won't need to know how it all works behind the scenes (just as many of us don't know exactly how the internet works, and yet we use it all the same). This post would become a bit of a weighty tome if we started trying to explain all the details, so we're not going to do that here.
However, if you're interested in learning more about the technical side of things regarding Ethereum, it might be worth visiting their website by clicking here.
Who created Ethereum?
Unlike Bitcoin, we know exactly who created Ethereum – Mr. Vitalik Buterin.
Vitalik is a Russian-Canadian programmer and cryptocurrency enthusiast. He was introduced to Bitcoin first through his father, before becoming a co-founder and writer for Bitcoin Magazine. His programming and technical talents, and his vision to create a blockchain on which all kinds of blockchain applications could be built led him to create Ethereum.
Vitalik is an active voice in the world of cryptocurrency, often advising on other projects (such as OmiseGo), and providing his thoughts and opinions on all things crypto on Twitter.
What are smart contracts?
The Ethereum blockchain allows developers to build and deploy their own smart contracts and decentralised applications, with far more freedom than on many other blockchains. For a more in-depth look at smart contracts, read our article here.
How do you buy Ethereum?
As mentioned in the previous article, buying and trading cryptocurrencies can be a pain right now. There are lots of security checks and authentication steps to go through.
However, like Bitcoin, Ethereum is one of the easier cryptocurrencies to get your hands on due to its listing on Coinbase (an application you can use to buy cryptocurrencies with Dollars, Pounds, Yen etc).
It is one of only four cryptocurrencies you can buy with your hard earned 'real' money, along with Bitcoin, Bitcoin Cash, and Litecoin.
You can then use the Ethereum token on many cryptocurrency exchanges to trade for other coins and tokens, exactly like you can trade stocks and shares with the stock market.
Did you read our article on Bitcoin? Make sure you check it out by clicking below.