For networks, see Ethernet
For a comparison of the two dominant blockchain platforms, see Bitcoin vs. Ethereum
Ethereum is the most popular blockchain-based network after Bitcoin. The architecture was conceived in 2013 by Vitalik Buterin, and with the support of four other founders, Ethereum was launched in 2015. Ethereum's native cryptocurrency is ether (ETH), and it is traded just like Bitcoin. However, Ethereum is a general-purpose platform that hosts smart contracts, which are programs that provide endless functionality. See blockchain
Smart Contracts, Cryptos and dApps
Ethereum smart contracts are used to create other digital currencies in the form of tokens, and there are thousands of them (see ERC-20
Smart contracts are ushering in a new world of "decentralized finance" (DeFi). Every digital process that has typically been controlled by a centralized entity can theoretically be replaced by a smart contract on Ethereum. Games and virtual worlds run on Ethereum as well as ownership of art and collectibles (see NFT
). Ethereum is called the "world's programmable blockchain" and even more grandiose: "the world computer."
Programmed in a language such as Solidity, smart contracts execute specific functions activated by transactions. At the user's end, "decentralized apps" (dApps) on desktops and mobile devices create the transactions. See Solidity
Fees (ETH, Wei and Gas)
Fees are paid for trading ether (ETH) 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 and any action initiated by a new transaction.
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 miner that wins the competition to add the next block of transactions to the blockchain and execute them.
Simple Accounting Compared to Bitcoin
Known as the "account model," a user's ether balance on Ethereum is maintained like a bank checking and savings account (see Ethereum account model
). In contrast, Bitcoin uses a unique approach (see UTXO
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
, Ethereum 2.0
, proof-of-work algorithm
, Gemini Trust
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.