What is Ethereum?

Ethereum is a decentralized platform that uses the blockchain technology invented by Bitcoin creator Satoshi Nakamoto. Despite the fact that Ethereum and Bitcoin share many similarities, they are also vastly different in fundamental terms.

What is Ethereum?

Whereas Bitcoin has found a way to transfer value in a digital way, directly from person to person, Ethereum takes a different tack. The Ethereum network is intended to be the backbone of a new kind of Internet. It will have to form the base layer on which decentralized applications (dapps) and smart contracts can be launched. Compared to current Internet applications that are centralized, dApps would be much more secure, privacy friendly, and uncensorable.

Of course, to create a dApp or smart contract you need some programming knowledge. Ethereum has developed its own programming language: Solidity. Solidity should make it easier to program dApps and smart contracts.

What is the difference between ether and Ethereum?

Ether and Ethereum are two terms that are often mixed up. That doesn’t necessarily matter, most crypto owners know exactly what you’re talking about when you use one of those two terms. But there is a difference.

When we talk about Ethereum, we actually mean the entire network. On that network, of course, it is important to have a token available that represents a value. After all, there must be a way to pay each other. In addition, miners must be able to earn a reward for the work they do. Those tokens that represent a value on the Ethereum network are called ethers.

Thus, ethers are the payment units on the Ethereum network, making them an essential part of the whole. So when people say they bought Ethereum they actually mean ethers.

How does Ethereum work?

Ethereum, like Bitcoin, is an open source blockchain protocol. The source code of both projects can be viewed and verified by anyone. The operation of the protocol is largely identical to that of Bitcoin.

As with Bitcoin, all nodes in the network keep a complete copy of the transaction history. In addition, both blockchains are completely open, meaning that anyone is free to build on the protocol and launch applications on it.

Like Bitcoin, Ethereum uses a proof of work consensus algorithm. In time, however, Ethereum plans to move in part to a proof of stake algorithm that should require much less energy, with the aim of making it more ecofriendly and sustainable.

What can you do with ether?

Use it as a means of payment

Ethers represent a certain value and so it is logical that they will be used to pay each other with. There are also already numerous online shops that accept ethers as a means of payment and there are many organizations that accept it as a donation.

Fast transactions worldwide

Just like the other coins, with ether you can transfer value quickly from person to person. And that without the intervention of a central authority such as a bank. The only thing you need is your wallet and the receiving address of the receiver.

Using them as an investment

An investment in cryptocurrencies is an investment in the future. Therefore, it is not surprising that many people are venturing into investing in ether. But of course it remains a risk. The price is still very volatile. Therefore, only invest with money you can afford to lose.

Taking part in ICOs

First of all, what is an ICO? ICO stands for Initial Coin Offering, a new way to raise seed capital to fund a project. In 2017, ICOs had their breakthrough with the general public when around five billion euros worth of funding was raised this way. It is important to realize that a large proportion of projects that start with an ICO will never end up launching a successful product and you will therefore lose your investment. Are you planning to invest in an ICO? Then be very critical and do not let yourself be led by emotions.

Investing in an ICO is often only possible through one of the major cryptocurrencies such as bitcoin and ether. In exchange for your bitcoin or ethers, you will then receive a token from the project you are investing in. The first tokens are often released during an ICO, even before the tokens can be traded on an exchange. Here in Brickken, we will issuing our BKN utility token through an Initial Dex Offering or IDO, which is a form of ICO, where you use a decentralized exchange to make the offering of your cryptocurrency. Read our whitepaper to find out more!

Where do you get ethers?

Ethers are thus the payment units used on Ethereum. So that makes ether a cryptocurrency, just like bitcoin and litecoin, for example and are available at the normal cryptocurrency brokers.

But in what way can you actually get ethers?

  • By accepting ether for goods or services that you offer
  • By mining ethers
  • By buying ether
  • Accepting ether as a form of payment

Because of all the possibilities that the Ethereum protocol offers, you can also see Ethereum as a kind of ecosystem in which everyone exchanges services for ether. One of those possibilities are smart contracts. Do you want to buy something via a smart contract? Then you pay with ether. The recipient of ether can exchange this currency for euros but also use it to buy other services or goods.

Mining ether

The Ethereum blockchain is maintained by miners. Approximately every 15 seconds a new block containing the last processed transactions is added to the blockchain. With each new block, three new ethers also come into circulation that are paid out as rewards to the winning miner. Ethereum currently still uses a proof of work consensus algorithm, which means that miners must perform calculations to eventually arrive at the correct solution. As with Bitcoin, you no longer have to try this with your normal computer, as you are competing with computers specifically designed for mining.

Buying Ether

The easiest way to get ethers is to buy them. This can be done by buying them directly from another owner, but also by buying them from a cryptocurrency broker.

Summary

You now know the difference between ether and Ethereum. Ether is the cryptocurrency with which you can pay within the Ethereum network. Ethereum is a network on which decentralized applications can be built and launched, becoming the backbone of a new kind of internet, and the first blockchain where asset tokenization was made possible.

Published On: August 20, 2021Categories: Blockchain, Brickken0 Comments

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