It is common to see some explanation that uses Bitcoin as an example to present another digital currency. And in the case of Ethereum and, consequently, Ether would be no different.
Ethereum can be described as a decentralised blockchain-based platform. The Ethereum platform requires several interconnected computers called nodes to operate.
Despite its parent technology characteristics, Ethereum has a somewhat specific function: creating smart contracts (or, in English, smart contracts).
Such contracts work with the same idea as paper contracts, sealing an agreement between two or more parties to a negotiation made within the Ethereum network.
But what makes the contract an “intelligent” instrument? That’s where the magic of this technology comes in.
As soon as some prerequisites are completed, the contract is made to fulfil certain operations automatically.
All types of transactions made within Ethereum are paid in Ether, and that is where we enter the second part of our explanation.
The history of Ethereum
Vitalik Buterin, a programmer, first introduced the idea of Ethereum in a whitepaper in 2013. Buterin expressed scepticism about Bitcoin’s limitations. He insisted that application development needed a new scripting language. All in all, his goal was to develop a decentralised application that did just that. In conclusion, this is how the Ethereum project began.
- Any central government does not control them, so they cannot control their value.
- They are more challenging to falsify than the currencies we use, like the Euro or the Dollar.
- The lack of agents when making transactions or payments makes it more affordable.
- Open source system like Bitcoin, which allows you to create improvements.
On the other hand, there are also some differences between Bitcoin and Ether, of which we can highlight:
- There is no Ethers limit, unlike Bitcoin, which will have a maximum of 21 million units.
- Ethereum rewards a fixed amount of 5 Ethers for mining. This is unlike Bitcoin which reduces by half for every 210000 mine blocks.
- Ethers transaction times are much faster than Bitcoins, with the ability to execute operations in seconds instead of minutes.
- Smart contracts integrated on the same Ethereum platform without the need for any external software.