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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 native cryptocurrency; however, unlike Bitcoin, Ethereum is a general-pupose blockchain. It is used to host other cryptocurrencies as well as "smart contracts." See blockchain.

What Are the Contracts Used For?
Smart contracts are set up to execute operations when conditions are met. For example, Ethereum can handle a real estate transaction instead of a lawyer or loan agent. It can be used to set up escrow accounts that pay funds at a certain time. Ethereum can manage personal and equipment identities, and it would be an ideal solution for 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
Ethernet's native 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 USD $1,400 and ended at $117. However, in 2021, one ETH topped $3,000.

Ethereum Classic (ETC)
Due to a hacking event that stole USD $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, EVM, Ethereum 2.0, proof of work algorithm, blockchain, Gemini Trust and Bitcoin.




Essential Reading
There is a lot to explore with Ethereum. To obtain a solid understanding of all its ramifications, Dr. Michael Solomon's book is indispensable.