Ethereum Simplified
What is Ethereum
Let’s take a trip in history to get a better understanding of Ethereum. In 2013, a 19-year-old programmer named Vitalik Buterin had the belief that Bitcoin was limited in what it could do and decided to build a platform that would enable anyone to build and run applications that would support any kind of transactions using blockchain technology.
He eventually launched the new blockchain in 2015 called Ethereum. Ethereum has since grown to become the second largest cryptocurrency after Bitcoin and is the home of thousands of applications and solutions.
How does Ethereum work?
Ethereum is basically a software platform that runs on a blockchain where users can build decentralized applications (dApps) that involve the use of cryptocurrencies. Applications built on Ethereum are created using special computer codes called smart contracts.
Quick info! Smart contracts are like regular paper contracts that establish terms of agreement between parties. In Ethereum, smart contracts ensure that terms are executed automatically and remove the need for third parties to be involved in transactions.
What makes Ethereum attractive is that it is not owned by a single individual. Anyone with an internet connection can build applications and use applications built on Ethereum.
What can you build on Ethereum
Some of the solutions that can be built on Ethereum include.
Gaming platforms: There are several games that have been built on Ethereum where players can game and earn tokens. The popular ones include Axie Infinity, The Sandbox and League of Kingdoms.
Read our article on crypto gaming
Saving/lending platforms: There are several saving and lending platforms developed on Ethereum where you can save or lend out your crypto for interests. Compound and Aave are two of the most popular ones used by many crypto enthusiasts.
Non-fungible tokens (NFTs): NFTs are special tokens that provide ownership rights to a specific digital or physical asset. Ethereum is the most popular blockchain for creating NFTs and popular NFTs include cryptopunk and cryptokitties.
Read our article on NFTs simplified for beginners.
What is the difference between Ethereum, Ether and ETH
Ethereum, Ether and ETH are three words that are used interchangeably but have different meanings.
- Ethereum is the name of the blockchain where users can build decentralized applications.
- Ether is the name of the cryptocurrency token used on the Ethereum blockchain to pay for transactions called gas fees.
- ETH is a popular word that most people call ‘’Ether’’ and refers to the token.
Ethereum vs Bitcoin
Ethereum and Bitcoin are two cryptocurrencies that are built using blockchain and serve as a means of payment. However they have different concepts.
Bitcoin was designed primarily to serve as an alternative to traditional currencies and serve as money or a store of value. Ethereum was built as a software where anyone can create different decentralized applications using smart contracts. Hence Bitcoin is usually called a digital gold while Ethereum is referred to as digital oil.
Should you invest in Ethereum?
Ethereum like Bitcoin is very volatile and has experienced numerous price swings since its launch in 2015. However it remains one of the most popular and used cryptocurrencies which makes it an attractive digital asset for investment.
