Cryptocurrencies explained: What is Ethereum?
Link copied to
Ethereum is one of the most exciting projects in the blockchain and cryptocurrency industry. It’s the second-largest cryptocurrency platform by market capitalisation, currently valued at AU$64 bn. But what exactly is Ethereum?
Firstly, Ethereum is a publicly available blockchain network. Anyone can join and contribute computing power to the network by mining, just like Bitcoin. For providing power to the network, miners are rewarded with Ether (ETH), Ethereum’s bespoke cryptocurrency.
For each action on the network, a fee in ETH is paid to perform it. This fee is called gas. You can also use ETH to buy goods and services, or trade it on exchanges like BTC Markets.
In addition, a key feature of the Ethereum platform is that provides the network support for smart contracts. Smart contracts are digital contracts. They are computer protocols that digitally facilitate, verify, or enforce aspects of legal contracts. These actions happen over Ethereum’s blockchain network without any human intermediary. Governments and banks are turning to smart contracts for their speed, affordability, security, and reliability.
Ethereum’s main party-piece is that it’s programable. Anyone can build new applications or cryptocurrencies that run on Ethereum’s blockchain network. These applications could be financial services, games, or even new types of cryptocurrency. There are over 260,000 cryptocurrencies that run on Ethereum. Many of these are top 100 cryptocurrencies by market capitalisation.
Ethereum’s programmability has given rise to decentralised finance, one of the biggest trends in cryptocurrency. Decentralised refers to Ethereum’s distributed network that anyone can join.
This network is made up of numerous connected computers. A centralised network, like a bank, has a central computer that its services run over.
Decentralised finance aims to reimagine our financial infrastructure using blockchain technology. It provides financial services the same way a bank would, which then run over Ethereum’s blockchain network. With services taking place on the blockchain, there is no human interaction.
Using decentralised finance carries cost-saving and security benefits (amongst others) that blockchain technology provides. It aims to provide financial services to the 1.7 billion people who currently don’t have access.
There is no denying Ethereum’s worth. It is reshaping how people approach and interact with finance. It will be exciting to see what happens in the next five years and beyond. To learn more about Ethereum, including how to buy it or invest, visit BTC Markets, Australia’s largest cryptocurrency exchange.
BTC Markets is Australia’s leading digital asset exchange, trusted by 270,000 verified clients who have traded over $9.8 billion. Buy, sell and trade Bitcoin (BTC), Ethereum (ETH), XRP and more with AUD today. Visit BTC Markets for more information.
This article was developed in collaboration with BTC Markets a Stockhead advertiser at the time of publishing. This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.