In this guide we ask the question, “What is Ethereum?”, we go into the basics of it’s underlying technology and it’s use cases.
The cryptocurrency universe is a huge one that even experts have a great difficulty keeping up with. Although Bitcoin due to its sheer dominance in value gets most of the limelight and news headlines, it is by far only fraction of this amazing industry. There are over 1200 distinct cryptocurrencies each with its own functions and uses. And among the most influential is what is known as Ethereum which by level of reach has a far greater hold of the industry even greater than what Bitcoin has.
What is Ethereum?
Ethereum is a blockchain based platform which represents a cutting edge infrastructure rather than a mere currency upon which other cryptocurrency and blockchain applications are built. Ethereum is far removed from the purposes Bitcoin serves, as it has a far more defined scope of application to which it can be deployed. To give an example it is said that if Bitcoin was a application, then the blockchain technology would be the building blocks on which it thrives, and in extension Ethereum is the platform for cryptocurrency startups to build their applications on.
Ethereum, using solidity, it’s ative coding language for smart contracts, opens the gates for a new wave of innovation. Smart contracts allow users to interact in complex contracts without a trusted 3rd party to execute it’s clauses. Basically, Ethereum allows the ability to remove the need for lawyers, accountants, bankers, insurance companies and many other expensive parties we trust to execute contracts and deploy business infrastructure.
What then is the Currency for Ethereum?
Having explained that Ethereum is not a mere digital currency, it is also important to note that it has also created its own native cryptocurrency which startups use to buy space upon which to build their applications known as the Ether. The Ether is what is comparative to Bitcoin as it can be used for peer-to-peer payments or exchanged against other cryptocurrencies or fiat money.
Ether is also the currency which funds the smart contracts which are deployed on it’s network. To execute a contract will requires a certain amount of “gas” which is subtracted as a fee in Ether when a party intracts with a contract or application.
What Makes Ethereum so Special?
Ethereum is touted in some quarters as the standard for decentralized application platforms and smart contracting . It has many unique features, some of which include:
- An All-Powerful Blockchain: The Ethereum blockchain in its size and make is a mind blowing venture. It is so huge that an exact number cannot be placed on the computational power that resides in it. Ethereum is the platform that is responsible for the coming online of dozens if not hundreds of new blockchain apps and cryptocurrencies. This is because it has a limitless resource pool of power to accommodate them.
- Conditional Payments: Another key feature that makes Ethereum unique is that it gives the user an option for safer payments unlike those of Bitcoin and other cryptocurrencies. Ethereum as a feature known as a Smart Contract in which the user can state conditions under which payments they make can be finalized. This ensures that those sending payments to parties they don’t know, never get cheated out of their money by fraudulent elements.