Ethereum is an open source digital platform that allows you to create decentralized applications, which are especially useful for the cryptocurrency market and more. Learn more about this topic below.
What is Ethereum?
As we mentioned before, it is a digital platform that allows you to create independent applications, which can become security programs, voting systems, and even payment gateways for cryptocurrencies.
Similar to Bitcoin, Ethereum is not regulated by any bank, government, or central authority.
The creator of this platform is Vitalik Buterin and he developed his first version in 2015, with the collaboration of others. Since then, it has been rapidly gaining in popularity, which has resulted in the emergence of other cryptocurrencies that are seen as rivals to bitcoin itself.
The price of Ether, as the Ethereum cryptocurrency is known, can become very high, because it is one of the most popular resources in the sector, which is why it is chosen by investors before Bitcoin or other options.
How does Ethereum work?
This is an open source platform that works under the Blockchain methodology, with which many computers in the world can be linked, since it is a decentralized system.
The point is that each computer has a copy of the Blockchain and a general agreement is required to make any changes to the network.
The Ethereum blockchain works in a similar way to that of Bitcoin, as it also includes a record of transactions. However, developers can create decentralized applications with Ethereum, which are known as “dapps” and are stored on the Blockchain in the same way as transactions.
Knowledge about this network and its cryptocurrencies is essential to get the most out of it, recover your investment and make a profit. You can learn more about it on our blog.
Under the name of dapps are open source computer programs that use Blockchain technology and, unlike conventional applications, do not require an intermediary to function.
Among their common characteristics, it can be highlighted that they are decentralized and open source applications, despite the fact that it is a very new concept that is difficult to define.
Dapps are created from groups of smart contracts which correspond to code scripts that allow you to exchange money, shares, content or anything else that has value.
These smart contracts are made with a virtual machine identified as Ethereum Virtual Machine and when one of them is active in the Blockchain, it is automatically executed as a computer program.
Of course, said execution is carried out freely according to what has been programmed, without censorship, restrictions or any type of influence by third parties.
Is Ethereum a cryptocurrency?
Not really, since the term “Ethereum” refers to the digital platform, while the currencies used to carry out transactions on the network are called ethers.
This means that the ethers are the cryptocurrencies that are used in the Ethereum network and therefore they are the ones that appear in the operations.
Even so, users often refer to them as “Ethereum”, which is why this confusion has been generated.
Ethereum vs Bitcoin
In this last section we will point out some key differences between Ethereum and Bitcoin:
• On Ethereum developers can raise their own funds for applications, create contracts and ask for collateral from members.
• Relative inflation decreases each year because there is a finite amount of bitcoins available.
• Unlike bitcoin mining, people are dedicated to getting ether on the Ethereum network.
• The costs of bitcoin transactions compete with each other for equality and are limited to the size of their blocks.
Remember that if you are interested in knowing more about trading, cryptocurrencies and other popular techniques today, you will find useful content in our blog posts.