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Definition: Ethereum


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

(2) Ethereum is the second most popular blockchain-based network after Bitcoin. "Ether" is Ethereum's own cryptocurrency; however, unlike Bitcoin, Ethereum is a general-purpose platform."

Ethereum is used to host other cryptocurrencies (cryptos) as well as applications and "smart contracts" that are ushering in a new world of "decentralized finance" (DeFi). Everything that has typically been handled by a bank, brokerage, law firm or casino (borrowing, lending, saving, trading, agreements, gambling, etc.) can be replaced with an application on the Ethereum blockchain. It is called the "world's programmable blockchain" on the Ethereum.org website. See blockchain.

What Are the Contracts Used For?
Smart contracts are set up to execute operations when conditions are met. For example, Ethereum can be used to handle a real estate transaction instead of a lawyer or agent. It can manage escrow accounts that pay funds at a certain time. Ethereum is a solution for managing personal and equipment identities, as well as electronic healthcare records. "Decentralized apps" (dApps) are written to interact with the smart contracts, and the possibilities are endless. See Ethereum token.

ETH, Wei and Gas
Ethereum's cryptocurrency is "Ether" (ETH), and developers pay in ETH to add their apps to the network. One quintillionth of an ETH is a "wei" and a billion wei are a "gwei" (gigawei). Gwei are used to pay the fees, known as "gas," to the Ethereum node that wins the competition to add the next Ethereum block to the blockchain as well as handle a smart contract transaction.

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 topped $3,000.

Ethereum Classic (ETC)
Due to a hacking event that stole $50M in Ether 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 blockchain, and the two are not compatible. As of 2021, 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.