Ethereum

About Ethereum

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Ethereum is a digital software platform. Ether (ETH) is the cryptocurrency that is used on the platform.

Ethereum: Digital platform that aims to replace cloud services and servers

Ethereum is a form of decentralized Internet with the purpose of replacing third party involvement. The information can thereby be distributed equally and no single entity can have control. This also means that the information is less vulnerable to hacking, for example.

The platform is built on similar technology to Bitcoin. The information is stored in so-called nodes in a global network. Ethereum is a peer-to-peer network that developers can use to run their application code on. These applications are called Dapps, distributed apps. The aim is to make the Internet more democratic and decentralized without impacting user experience.

The programs running on the Ethereum platform can essentially be anything. Today, they are mostly being used for so-called smart contracts. It means that the contract is coded and that the code automatically triggers an event (for example to pay out an amount) when the terms of the contract are met.

Ether (ETH) is the fuel

Ether is the cryptocurrency used as payment for those lending out their computer power to the Ethereum platform. Many compare it to a fuel that gives incentive to developers to be a part of Ethereum's decentralized network.

Ether is based on blockchain technology, where new cryptocurrency is mined (link to blockchain) with computer power and mathematical calculations. Miners compete to complete the transactions. When a calculation is done, it is put into a block. That block will then be in the blockchain forever. The blockchain is public, transparent and very hard to change afterward.

Ether differs from other cryptocurrencies

The cost of using the Ethereum platform can differ a lot. In general, applications that demand a lot of computer power and time costs more to run.

One significant difference is that Ether does not have a maximum amount of coins that can be mined. It is possible to mine a total of 18 million Ether every year, and new can be created continuously. Compare this to bitcoin, where the maximum amount is 21 million coins, a so called hard cap.

During 2017, Initial Coin Offerings (ICO) grew tremendously, thanks to Ethereum. Companies discovered how they can use the Ethereum platform to build their ideas and raise money through ICO. ICO is similar to crowdfunding and Initial Public Offerings (IPO). In IPO companies sell shares to get funds. Meanwhile in ICO, blockchain companies raise funds with crowdfunding and then give back cryptocurrency coins to the investors.