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Definition: Ethereum


(1) For a comparison of the two dominant blockchain platforms, see Bitcoin vs. Ethereum.

(2) Ethereum is the most popular blockchain-based network after Bitcoin. "Ether" (ETH) is Ethereum's native cryptocurrency, and it is traded just like Bitcoin. However, Ethereum is a general-purpose platform that is more than digital money. Ethereum is a host to other cryptocurrencies and smart contracts. See blockchain.

Other Cryptos on Ethereum
Ethereum is used to host other digital currencies in the form of tokens, and there are hundreds of them with names such as Chainlink, Tether, Shiba Inu and Ada (see Ethereum token).

Smart Contracts and Decentralized Apps (dApps)
The second major feature of Ethereum is the "smart contract," which is ushering in a new world of "decentralized finance" (DeFi). Every digital process that has typically been controlled by a centralized organization can theoretically be replaced by an application on Ethereum. Games and virtual worlds run on Ethereum as well as ownership of art and collectibles. This is why Ethereum is called the "world's programmable blockchain" and even more grandiose: "the world computer." See CryptoKitties, Decentraland and non-fungible token.

Programmed in the Solidity language, smart contracts execute operations from a transaction or when conditions are met. At the user's end, "decentralized apps" (dApps) on desktops and smartphones interact with the smart contracts. See Solidity.

Fees (ETH, Wei and Gas)
Fees are paid for trading Ether (ETH), for trading a crypto token and for every transaction that executes a function in a smart contract. Transactions include deploying the smart contract onto Ethereum in the first place by the developer, any action initiated by a new transaction, as well as an automatic contract function such as making a payment on a certain date.

The fees in Ethereum are called "gas." One quintillionth of an ETH is a "wei" and a billion wei are a "gwei" (gigawei). Gwei are used to pay the fees to the Ethereum node that wins the competition to add the next block of transactions to the blockchain.

A Teenager Conceived Ethereum
Co-founder of Bitcoin Magazine at the age of 17, Russian-Canadian programmer Vitaly Buterin saw the difficulty developers had creating their own blockchains from scratch. In 2013, he published a white paper on a general-purpose blockchain, and a development team began working on Ethereum the following year.

2018 - A Roller Coaster Ride
Like Bitcoin, 2018 was the year cryptocurrency values dropped precipitously. Ethereum's price started the year at $1,400 and ended at $117. However, in 2021, one ETH nearly reached $5,000.

Hard Fork (ETH) and Classic (ETC)
Due to a hacking event that stole $50M in ETH from an Ethereum-based venture capital project known as "The DAO," Ethereum was split into Ethereum Hard Fork and Ethereum Classic in 2016. Ethereum Hard Fork (ETH) started with a revised blockchain and returned the stolen funds to the DAO token holders. Ethereum Classic (ETC) continued to use the old protocol, and the two are not compatible. As of 2022, one ETH is considerably more valuable than one ETC. See Bitcoin vs. Ethereum, crypto glossary, Ethereum token, EVM, Ethereum 2.0, proof-of-work algorithm, blockchain, Gemini Trust and Bitcoin.




DeFi Pulse - Ethereum's Scope
The Defi Pulse website (www.defipulse.com) lists the decentralized finance (Defi) protocols running on Ethereum (this is the first 15 of 99 as of May 15, 2021). DeFi Pulse is an excellent source of information about the breadth and depth of Ethereum applications. DeX means "decentralized exchange."








Essential Reading for New Developers
To learn how to develop Ethereum applications, these two books are indispensable.