After Bitcoin, Ether is the second cryptocurrency with the largest market capitalization. Although Bitcoin is the undisputed number one, Ether or Ethereum is becoming increasingly popular.
What is Ethereum?
Ethereum is a decentralized blockchain-based network. It is a computer network to which users from all over the world are connected. Programmers from all over the world can use the open source network, as the source codes are publicly accessible. Users are encrypted, so they cannot be easily identified, but actions can be seen. This means that activities and transactions on the blockchain can be tracked by everyone as in a log, which should make manipulation difficult.
Ethereum was first described in a white paper in 2013 and launched in 2015. Since then, the blockchain has been used as a smart contract platform. Ethereum functions as an operating system on top of which different applications can run. These applications are smart contracts, which are, for example, crowdfunding campaigns, auctions or sales of NTFs; virtual shares or membership certificates can also be purchased. A peer-to-peer system is used, and payment is made in the proprietary currency Ether (ETH).
“The various assets are mapped digitally using tokens,” describes the principle Philipp Sandner (42), professor at the Frankfurt School of Finance & Management, to manager magazine. Decentralized financial tokens (i.e. defi tokens), NFTs, metaverse tokens are often – but not always – programmed in Ethereum.
Currently, a new generation of Ethereum is planned. It is supposed to make the blockchain more powerful and faster, with lower energy consumption at the same time. The catch: no date has been set yet. After several postponements, co-founder Vitalik Buterin (28) spoke earlier this year of late 2023 or early 2024.
Who are the founders?
Ethereum co-founder Vitalik Buterin.
Ethereum co-founder Vitalik Buterin Photo credit: Michael Ciaglo / Getty Images.
Unlike Bitcoin, Ethereum’s eight co-founders are well-known: in addition to Russian-Canadian software developer Buterin, they include Canadian-American entrepreneur Joseph Lubin (57), British Gavin James Wood (41) and American Charles Hoskins (34). Wood has since co-founded the Polkadot cryptocurrency network, Hoskins the Cardano platform. The founding team also includes Mihai Alisie, Anthony Di lorio, Amir Chetri and Jeffrey Wilke.
What is the difference between Bitcoin and Ethereum?
Experts refer to Ethereum as a platform token versus Bitcoin as a payment token. Bitcoin was once conceived as a currency for payment, speculation and investment. “Bitcoin could become digital gold,” says crypto-expert Sandner. He’s not alone in that opinion. Recently, billionaire Frank Thelen (46), who has invested in Bitcoin and Ethereum, announced in an interview with the Swiss newspaper Handelszeitung that Bitcoin will most likely remain the “store of value.” He expects a significant increase in the value of Bitcoin. The core of Bitcoin is its scarcity, which is limited to 21 million. “Scarce like gold, but not tangible like gold,” Sandner sums up.
Ethereum, meanwhile, was created as a platform on which various apps or applications run. On the one hand, payment transactions can be processed, on the other hand, Ethereum can also be used to conclude contracts.
Industry experts expect that platform tokens may overtake payment tokens in the future. This is justified by the fact that the market capitalization of bitcoin has already decreased as a percentage of the total market and platform tokens such as Ethereum, but also Solana and Cardano, have increased. Platform tokens are becoming more popular among startups, for example, as a way to find investors through the network without incurring commissions or other third-party requirements.