Ethereum is a popular decentralized blockchain network that uses smart contracts to function and is second only to Bitcoin in global market capitalization.
Unless you are already a cryptocurrency expert, this sentence is likely to raise more questions than it answers. While most people who have dipped their toes into the world of blockchain will likely have heard of Ethereum, explaining what it exactly takes time.
This is because many people make the mistake of thinking Ethereum is merely a currency identical to Bitcoin but not as famous. Indeed, given its enduring status as the blockchain network with the second largest market cap, it is easy to assume that it is the ‘second best’ cryptocurrency.
However, the truth is rather more interesting than that.
Ethereum and Bitcoin may both use decentralized blockchain networks as their foundation, but they serve entirely different functions, have disparate benefits and limitations, and polarize traders and investors alike.
This is what you need to know about Ethereum and how it differs from other cryptocurrencies:
Can you trade Ethereum?
The first question many people ask when they first come across Ethereum is whether they can trade it.
In short, of course, you can, but the reason why may surprise you.
Although many people wrongly assume that Ethereum merely exists as a form of cryptocurrency, this ignores the wider picture.
It is true that there is a cryptocurrency called ETH, but this does not form the beginning and end of the Ethereum story. In fact, ETH is used as the fuel that powers the Ethereum network. Think of it as digital coal or oil, storing and transferring energy and funding across the ecosystem.
The reason why ETH is valuable is that the network itself is desirable. There are countless different projects built on top of it, each requiring a considerable amount of ETH (both to construct the projects themselves and for users to purchase in-project products.
A popular example of this is the NFT market. Many NFT exchanges and creators trade in ETH, which further boosts the value of the cryptocurrency.
If you want to find out the current price index of Ethereum, then it is best to use a reputable crypto exchange.
A brief definition of the Ethereum network
The Ethereum network itself is a thriving digital economy that houses everything from third-party applications (such as decentralized finance projects) to gaming networks.
What makes the Ethereum network interesting is that it incorporates smart contract technology, which is a digital form of contract that writes an agreement between a buyer and seller into immutable code.
This contract will then be enacted regardless of outside intervention, making it an intriguing alternative to a central authority or third-party services.
What makes Ethereum different from other networks and cryptocurrencies?
A common misconception among casual observers is that Bitcoin and Ethereum are the same technology and are merely rival brands in the same vein as Apple and Samsung or Ferrari and Lamborghini.
They are completely disparate technologies that attempt to solve different problems. For example, the very base layer of Ethereum is built upon the Proof of Stake rather than Bitcoin’s Proof of Work workflow.
While many other crypto projects have since adopted Proof of Stake, Ethereum is regarded as the standard bearer for the technology.
Without getting bogged down in which is better or worse, it is simple enough to conclude that Ethereum is completely different from other projects (such as Bitcoin).