Understanding Ether and Ethereum

Bitcoin may have been the first cryptocurrency AND the first application of blockchain technology for storing and transferring digital assets. But Ethereum is taking blockchain technology even further.

What is Ethereum?

Since its introduction in 2015, Ethereum has become the most actively used blockchain in the world. It is the first platform to allow “smart contracts” that have the potential to streamline business processes around the world.

These “smart contracts” allow users to go beyond simply transferring payments to enabling the implementation of if/then logic into money itself. For example, you could program a contract to approve transactions at the grocery store, but also decline transactions at the candy store. Though this is a very simplified example, this type of self-executing code can automatically implement the terms of agreements between parties when conditions are met.

Ethereum introduces this into every asset – significantly expanding the world’s choices for interacting with money and enabling the development of decentralized applications that use smart contracts as their backend servers. Because it allows properties previously unseen on the internet, Ethereum is, in a sense, the next iteration of the internet.

What is Ether?

Ether (ETH), the cryptocurrency that powers the Ethereum blockchain, is now the second-largest cryptocurrency by market capitalization. Upon inception, 72 million ETH were created and sold. Each year, new supply is capped at an additional 16 million ETH in order to help prevent inflation. Like with bitcoin, ETH miners who successfully package transactions into blocks and upload them to the blockchain receive “block rewards.”

Consider that:

  • Ethereum is the most actively used blockchain in the world
  • Ether is the cryptocurrency that powers the growing network (and earns a cut of all transaction fees)
  • Ether incentivizes the operations of transactions on the Ethereum blockchain.

How is Ether stored?

As with bitcoin, keeping Ether safe and secure can be a challenge. Most individuals keep their private keys in either “paper wallets,” “hardware wallets,” “hot wallets” or “cold storage,” and each method has unique advantages and disadvantages.

Learn more about crypto

Blockchain technologies like Ethereum are not only changing the ways we interact with money, but also the face of the internet itself. Learn more about Ether and the role it can play in your portfolio.

Or you can read about why to invest in Ether, where we’ll discuss why now may be the right time to consider investing in Ether and how to incorporate it into your portfolio.