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What is Ethereum and how does it work?

Ethereum is more than a cryptocurrency: it’s a blockchain network that allows its users to create financial services, apps, and even businesses, all backed by innovative technology. Let’s find out more about the mysterious Ethereum and all it has to offer. 

What is Ethereum

Ethereum, alongside Bitcoin and Bitcoin Vault, is one of the currencies honoured by Exeno, the first online store to accept direct crypto payments. That’s because Ethereum is the second most popular cryptocurrency, surpassed only by the ubiquitous Bitcoin. Importantly, though they’re often equated, Ethereum is quite different from Bitcoin and is designed to be used in many spheres, not only as a cryptocurrency.  

How does Ethereum work? 

Broadly speaking, Ethereum is a blockchain-based platform with a native cryptocurrency (the well-known Ether or ETH) and a special programming language, Solidity. The name Ethereum is often used when talking about the associated cryptocurrency, sadly contributing to the overall confusion surrounding the project. 

In truth, Ethereum is far more versatile, providing an open-source platform backed by blockchain technology. Its users can create and share special entertainment, financial, or business apps, named “dapps” (short for decentralised applications). Ethereum is self-describing itself as ‘the world’s programmable blockchain’, a digital marketplace for publicly available dapps offered for so-called ‘gas’ fees, paid with Ether.  

Ethereum was created in 2015 by several blockchain devotees, including Joe Lubin, a blockchain apps developer, and Vitalik Buterin, who envisioned and first described Ethereum’s philosophy. It’s Buterin who serves as the public face of the platform.  

As a cryptocurrency, Ethereum is used to send secure and anonymise transactions from digital wallets without engaging any intermediaries. It also supports NFTs, non-fungible tokens, or e-certificates that confirm ownership of unique assets. Being a distributed public ledger, Ethereum secures deals made during NFT auctions by incorporating the inalterable ownership confirmation into its blockchain. 

Ethereum‘s key features and benefits 

Ethereum is a relatively recent solution and, as such, it’s packed with features that make it truly convenient to use.  

  • Broad and diverse applications 

As we’ve highlighted before, Ethereum can’t be reduced only to Ether, the technology’s native cryptocurrency, and its function as a store of value. Perhaps even more importantly, it is a platform for independent app developers and a way to execute smart contracts: agreements coded to be automatically enforced at a specific time, provided all pre-conditions are met. No third parties involved! 

  • Time-efficiency

While the Bitcoin network takes up to 10 minutes to confirm a transaction, Ethereum blocks are validated every 12 seconds. This, already impressive, the time frame may be reduced even further moving forward, as the Ethereum network is constantly updated.  

  • No overall cap of tokens to be mined 

In sharp contrast to Bitcoin’s hard limit of 21 million coins, Ethereum overall supply is uncapped. However, there is an annual mining limit of 18 million ETH. 

To sum things up: Ethereum is an easy-to-use cryptocurrency and an independent blockchain platform enabling businesses and developers to communicate and sell their services without having to rely on any intermediates. Sounds inviting? We think so too: at Exeno, we’re all for eliminating unnecessary middlemen and untapping crypto’s full potential. That’s why you can spend Ether on your favourite products at our store, with only a 1.8 per cent commission, and no FIAT conversion. 

Sources: 

https://ethereum.org/en/

https://www.investopedia.com/terms/e/ethereum.asp

https://www.forbes.com/advisor/investing/what-is-ethereum-ether/

https://www.coindesk.com/learn/ethereum-101/how-to-use-ethereum

https://www.investopedia.com/terms/s/smart-contracts.asp

https://ethereum.org/en/nft/

https://www.investopedia.com/news/why-ethereum-cofounder-proposing-hard-cap/

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