The Million Dollar Question: What is Ethereum
With cryptocurrency getting a lot of attention in recent times, everyone wants to invest and get rich. There are so many terms floating about, Bitcoin, Ether, Dogecoin, Ripple etc that it can get a little confusing, especially when you are beginning.
What’s a Crptocurrency
Any form of currency that exists digitally or virtually and uses cryptography to secure transactions is called a cryptocurrency.
Cryptocurrencies don’t have a central issuing or regulating authority, instead it uses a decentralized system to record transactions and to issue new units. If you are here to learn more about Ethereum, we’ll be covering the basics.
Ethereum – platform or crypto currency?
Ethereum is a platform powered by blockchain technology that is best known for its native cryptocurrency—called Ether or ETH or simply Ethereum.
We are sure you would want us to decode this further. Let’s get to blockchain technology.
Imagine a very long chain of blocks linked together, with all of the information about each block known to every member of the blockchain network. A notable thing is that every member of the network has the same knowledge of the blockchain, which functions like an electronic ledger.
This equal access to information ensures that distributed consensus can be created and maintained about the status of the blockchain.This distributed consensus is what makes ethereum different from other platforms.
The Ethereum platform can support many more applications other than ETH and other cryptocurrencies. The network’s users can create, publish, monetize, and use a diverse range of applications on the platform, and use ETH or another cryptocurrency as payment.
Are Ethereum and Bitcoin similar
Ethereum is valued second only to Bitcoin, as of December ’21.
Ethereum is often compared to Bitcoin. While the two cryptocurrencies have many similarities, there is a major difference.
The Ethereum platform was founded with broad ambitions to leverage blockchain technology for many diverse applications. Bitcoin was designed strictly as a cryptocurrency.
Another difference that affects investors is how the Ethereum and Bitcoin networks treat transaction processing fees. These fees, known as “gas” on the Ethereum network, are paid by the participants in Ethereum transactions. However, the fees associated with Bitcoin transactions are absorbed by the broader Bitcoin network.
And just to let you understand more about the enormous scope of the cryptocurrencies, here’s a fact.
The maximum number of bitcoins that can enter circulation is 21 million. The amount of ETH that can be created is unlimited, although the time that it takes to process a block of ETH limits how much Ether can be minted each year. The number of Ethereum coins in circulation is more than 118 million at the close of 2021.
We hope these simplistic definitions would help you get a broader understanding as you encounter these terms and even go on to invest.
If you would like to write for us, you can read the submission guidelines and be part of BeStorified.
