What Is Ethereum? Origin And Characteristics

If Bitcoin is considered the father of cryptocurrencies, Ethereum would be the mother. Let's say that bitcoin was the pioneer, and is intended to serve as the money of the future. Ethereum, for its part, goes much further and allows the creation of smart contracts. For this reason, it is considered the mother of the crypto world. In addition to having a huge network and being the second project in terms of market capitalization , many other projects have been born and will be born in its network.

What difference is Ethereum from Bitcoin?

Both Ethereum and Bitcoin, and all other cryptocurrencies use blockchain technology. However, Bitcoin in its creation was conceived to give the world a centralized payment system, and that over time is becoming a store of value and the nucleus of all this new technology. Ethereum, for its part, would be an advance within this technology since it is not only limited to the transfer of value through the coins or "tokens" of its network, but the network allows editing and storing code , so it can be create smart contracts and applications.

How does Ethereum use the blockchain?

The blockchain is a decentralized system that works like an immutable ledger. All transactions are recorded and cannot be modified. The blocks that include these digital currency transfers are placed one on top of the other, so it is impossible to change the information of a block, since this would create a mismatch in the entire network. In this way, if a person sends money to another, this transaction is recorded forever in the history.

We already know that Bitcoin is used as a means of payment thanks to these characteristics of the blockchain. It also serves as a store of value (despite its volatility) thanks to its limited supply. Ethereum, is not limited only to the exchange of value through its currency, the "Ether". Ethereum allows the creation of smart contracts and applications on its network. In this way, any programmer can create their application on the Ethereum network , and use the Ether currency as a means to interact with it. This can be applicable to digital games, betting systems and a long and unimaginable etc. The use of this technology in everyday life has only just begun.

What does a smart contract mean?

Let's give an example to better understand how it works. In Bitcoin or the cryptocurrencies that are used as a payment system, one person transfers coins to another and the chain of blocks records that "so-and-so has passed so many coins on the day so and so." In Ethereum, however, we can also carry out a smart contract in such a way that it says "If Spain wins the 2018 World Cup in Russia, so-and-so will pay 10 coins to so-and-so." In addition to this, we are used to earning digital currencies in the world of video games. Ethereum allows you to create applications such as games and make payments or charges in that game using the "Ether" currency. As a curiosity we can comment that the most popular Ethereum application is a game of kittens.

Origin and characteristics of Ethereum

Ethereum is of Russian origin, it was created in 2014 by the young programmer Vitalik Buterin. Subsequently, a development team made up of more programmers was created and is crowdfunded. The Ethereum network is in constant development , and it is estimated that its value will multiply in the coming years.

The Ethereum Virtual Machine (EVM)

It is software that interacts with the Ethereum network and allows the creation of applications regardless of the programming language used. Thanks to this application, a multitude of applications can be created within the same network without having to create a new block chain for each project.

the internet of things

This concept is gaining strength within the crypto world and consists of the "tokenization" of assets. In the not so distant future, physical assets such as homes, cars, or anything that can be sold or rented, may be tokenized. The Ethereum network would ensure that the transaction is recorded by means of a smart contract so that it serves as a kind of automatic audit.

Mining on Ethereum and the digital currency Ether

Ethereum must be mined, thus ensuring the maintenance of the decentralized network through nodes. Therefore, as with Bitcoin, miners get rewards in the form of Ether for using their computational power to solve the blocks and maintain the network.

Here we find big differences with respect to Bitcoin. The Ether coin does not have a maximum number of coins programmed in its code. This means that it is an inflationary currency. In theory, there will be more and more Ether on the market, so its price will tend to decrease over time once the demand remains stable. However, if there is a limitation on its issuance, no more than 18 million Ether can be created per year , which is 25% of the initial number of coins.

Does Ether hold its value over time?

Despite this, thanks to the exponential increase in demand as far as the world of cryptocurrencies is concerned, its price has remained in a long-term upward trend since its creation. At its launch, an Ether was worth $0.50, as of the day of writing this article its price ranges between $400 and $600. The most optimistic analysts see the value of Ether with a projection of $2,000 or $3,000 by the end of 2018. Remember that with this we are not saying that you should run to sell your house and car to buy cryptocurrencies, but it is a good idea to people are learning more about the chain of blocks because everything indicates that it will be the technology that will prevail in the coming years. If you are going to invest, you must acquire a solid financial background first.

Next stages of development and changes in the network

Due to everything we have talked about in the previous points, the Ethereum community is studying several changes. Let's keep in mind that being a decentralized system is based on consensus. Nobody can make war on their own, and if this happens, what is called a “Hardfork” according to the terminology of the crypto world.

Among the possible changes that the community programmers are considering to make the Ethereum network more solid and sustainable, we can highlight two:

-Set a limited number of coins. That is, make Ether a deflationary currency like Bitcoin. The goal of this change would be for Ether to serve as a store of value over time. This change would also make it more attractive to investors.

-Move from the proof-of-work mining system to the proof-of-stake system. This change is what some of the newly created cryptocurrencies are based on. It defends that the rewards are granted to the "holders" or people who keep their coins saved. Also that these users are the ones who worry about keeping the network active and safe.


Ethereum is considered a version 2.0 within the blockchain technology. Its system is much more advanced than Bitcoin and surpasses it in practically all its aspects. This does not mean that it will surpass Bitcoin in capitalization, only time will tell. What is clear is that the mother of cryptocurrencies is here to stay. It aims to change not only the method by which we transfer value, but also the way in which we do business or interact with other people through the Internet.

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