Ethereum is known as the second most popular cryptocurrency globally after bitcoin. However, unlike bitcoin, it is not technically another cryptocurrency. Ethereum is a cryptocurrency, and it is also a decentralized platform for application and smart contract development. Ether is the cryptocurrency here. But, it is somehow different from bitcoin. If you want to start bitcoin trading check bitcoin wallet basics.
What is Ethereum?
Ethereum was first described in late 2013 by its founder Vitalik Buterin. Later, it was officially launched in July 2015. The cofounders of Ethereum are Gavin Wood, Joseph Lubin, Charles Hoskinson, and Anthony Di Iorio.
Though Ethereum and Ether are related, they are two completely different things. Ethereum is a computer network with smart contract functionality, and Ether is the native cryptocurrency that fuels it.
The Ethereum network consists of three specific layers. They are –
- The Ethereum Virtual Machine (EVM)
- Ether or the cryptocurrency
- Gas
The Ethereum Virtual Machine (EVM):
EVM is the application that creates an environment to build and operate smart contracts. It is also called DApps. As it is decentralized, it has no central point of failure. The Ethereum blockchain that is embedded in the network spreads the application’s code over the entire EVM network. The open-sourced blockchain network runs by mining technology. Anyone can use it. That is the point where Ether comes.
Ether:
Ether is the native cryptocurrency of Ethereum that can be compared to bitcoin here. But, Ether has some other characteristics also. It has an actual real-world value in a specific way. To understand it, we must understand Gas first.
Gas:
In simple words, gas is the translated form of Ether. It is the fuel of the system. The Ethereum network demands some energy to run as it is a shared network. Here forms the link between the network, Ether, and gas. Gas can be described as the amount of work that EVM does. But, it charges a cost to make the work done. Here the cost is Ether. The person using the network must pay Ether to make changes in the Ethereum blockchain. The ether cost depends on the transaction volume.
The process behind earning Ether:
If you know how you earn bitcoin by solving puzzles on the crypto network, it is easy to understand the Ether earning process too. Both are quite similar. Using the EVM network, the miner makes changes to the Ethereum blockchain, like how the blocks are verified or added to the bitcoin blockchain. As a result, the miner gets Ether as an incentive for his work, the way the bitcoins are earned. You can always set a fixed amount. Remember, the ether amount decides the transaction volume and the speed. So, the more ether amount you fix to sale, the greater incentives you receive.
Comparison between Ethereum and Bitcoin:
We might have understood the main difference between the two things by now. Bitcoin is a cryptocurrency itself, whereas Ethereum is a programmable software that needs the ether value to work. Companies use the Ethereum platform to build new programs.
Another thing is that the number of bitcoins is fixed. By the time it was issued, the bitcoin protocol had fixed the number of 21 million that could be ever mined. But Ether does not have any such fixed number of existences. The only thing that is fixed here is that 18 million Ether can be mined in a year which refers to an unlimited supply of Ether in the future.
The Ethereum software is more robust than bitcoin. The main reason is that Ethereum needs to be updated continuously because it is designed to run smart contracts. The software is trying to maximize the transaction rate from 15 per second to 100,00 per second. Currently, the rate is 30 per second.
Things you can do with Ethereum
Ethereum is not just only building programs. You can experience it in so many other aspects too. It is a big platform where you can have cloud-based operating systems, messaging networks, social networks, storage sites, etc. You can play games like Ether Dungeon, Criptokitties, and Acebusters.
In a nutshell, the Ethereum network is growing so rapidly that it has a higher possibility to win the race with bitcoin. As a result, the ether currency will grow too.
