What is ether?
Ether (ETH) is the cryptocurrency and at the same time the “fuel” of the Ethereum ecosystem. It is used to pay for internal services and applications. Initially, ether was produced to support the Ethereum platform as a project, but very soon became one of the world's leading cryptocurrencies. Ether is the second largest cryptocoin after bitcoin in terms of a market capitalization.
Ether as a fuel
The Ethereum Virtual Machine (EVM) is a platform for creating and launching smart contracts and applications that cannot run without fuel. Ether is required for any action/operation that occurs within an application on the platform.
The commission for a transaction is called "gas." It is charged in Wei and GWei, the fractional units of ether.
Ether as a means of payment
It is used to pay for services and apps on the Ethereum platform as its internal currency. All payments can be made in ether only.
Ether as a method of reward
Developers, who create apps for the platform, contribute to its development and receive a reward thereafter. For programmers, this is an incentive for further work, while for the platform, it is a guarantee of its stable operation.
Ether as a store of value
ETH is a popular cryptocurrency that can be bought on the world's largest crypto exchanges and other sites.
At the dawn of ether, many people perceived it as Bitcoin 2.0. However, these two cryptocurrencies differ significantly.
Ethereum vs. Bitcoin
Differences between ETH and BTC
- The speed of a transaction confirmation in the Ethereum network is higher. In the Bitcoin network, one block is mined every 10 minutes, while in Ethereum – every 15 seconds.
- The bitcoin exchange rate is determined by demand and supply. With ether, everything is more complicated. ETH is pegged to Ethereum as an internal currency, and its exchange rate directly depends on the success of the platform development and the popularity of software products.
- The total number of bitcoins that will ever be mined is 21 million, while the amount of ethers is not defined.
Since there is no limit to the supply of ethers, this entails the risk of the cryptocurrency depreciation. However, the developers are searching for ways to solve this issue. A switch to a different consensus algorithm, from Proof-of-Work to Proof-of-Stake, is envisaged in the development plan of the platform for 2018-2019.