Tuesday, September 6th, 2022 | Cryptostotle #16 | By: Brad Lathrop
Have you heard of Ethereum? Chances are you probably have. But do you know what it is? Or why it’s so popular?
If not, don’t worry! We’ve got you covered.
This edition of Cryptostotle is Part 1 of our new series on Ethereum. Let’s begin.
What is Ethereum?
To start, Ethereum is an open-source blockchain technology, like Bitcoin. This means Ethereum’s code is available to the public and developers can access and build upon it.
In addition to being open-source, the Ethereum blockchain is decentralized. This means no central authority controls it. This is a key value proposition that cryptocurrencies (like Bitcoin) offer in comparison to fiat currencies. Fiat currencies are not decentralized but instead centralized, like the U.S. dollar which is controlled by the United States government.
If you want to learn more about decentralization, check out one of our earlier editions of Cryptostotle, “One of Bitcoin’s Most Important Traits: It’s Decentralized”.
So at this point, we’ve learned that Ethereum is an open-source, decentralized blockchain technology, very much like Bitcoin. Let’s continue!
Ether (ETH), The Cryptocurrency of Ethereum
Ethereum has a cryptocurrency called Ether (ETH), which is the second-largest cryptocurrency in the world.
Ether’s market capitalization at the time of this writing is $194,797,913,640. Not too shabby, but perhaps compared to Bitcoin’s gargantuan market cap of $380,894,121,605…it might be!
Remember that a cryptocurrency is a new form of digital money that enables people to send and receive money over the internet without the involvement of a middleman.
And from last week’s edition of Cryptostotle, you might recall that cryptocurrencies use cryptography to ensure security and anonymity (in case you missed it, check out last week’s edition, “What the Crypto in Cryptocurrency Means”.)
People can send and receive ETH over the internet just like they can do so with bitcoin. Ethereum, however, is significantly different!
How Ethereum Differs from Bitcoin
Ethereum is much different from Bitcoin, despite sharing some important similarities. Ethereum’s official website succinctly describes the difference:
“Ethereum builds on Bitcoin’s innovation, with some big differences.
Both let you use digital money without payment providers or banks. But Ethereum is programmable, so you can also build and deploy decentralized applications on its network.”
So, programmability is one of the key differences between Bitcoin and Ethereum, and is a huge reason why the Ethereum network has had so much success to date (becoming the second largest cryptocurrency in the world is no small feat).
This programmability enables developers to build applications using the blockchain. Here’s an additional excerpt from the website:
“While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you.”
In a nutshell, Ethereum is not just for payments. It’s much more than that, and is not trying to replace the leading cryptocurrency for payments (Bitcoin). We are going to get more into the features of Ethereum in our next edition of Cryptostotle!
Summary
So, in summary, Ethereum…
- Is an open-source blockchain technology (like Bitcoin)
- Is decentralized (like Bitcoin)
- Differs from Bitcoin in that it is a programmable blockchain and more of a “marketplace” and not a network specifically designed for payments
- Has its own cryptocurrency called Ether, which is the second largest cryptocurrency by market capitalization
While you soak this information in, we’ll be writing Part 2 of our Ethereum series, where we’ll be taking a deep dive into the Ethereum blockchain’s features! Stay tuned!
