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What exactly is Ethereum?

By Amy Luong
July 06, 2021

Remember your first time stumbling into a cryptocurrency exchange wanting to buy the fabled Bitcoin (BTC)? You were excited to make your first purchase yet you couldn’t help but notice something called ‘Ether’ (ETH) right below it.

>>>Read more: ETH 2.0: What to expect from EIP 1559<<<

What Exactly is Ethereum?

That’s because Ether (ETH) is the second-largest cryptocurrency by market capitalisation. It’s the — a decentralised public ledger sometimes known as the “world’s programmable blockchain” because of its .

What is ETH

An easy way to understand Ethereum is by comparing it with Bitcoin. While both Ether and Bitcoin run on blockchain technology, Bitcoin is merely ; . Think of it as digital cash without the controlling authority like a central bank.

Ether also facilitates transactions, but it’s Ethereum’s and nature that makes it more than just a blockchain with a native cryptocurrency.

Ethereum is a; the for a range of new applications including decentralised finance (DeFi), and non-fungible tokens (NFTs).

: Smart contracts are digital contracts that can be automatically executed without the need for a human intermediary (e.g. a banker or lawyer). This explains how DeFi projects (e.g. Bank-less financial activities like loans, insurance, and savings in cryptocurrencies) can be run on the Ethereum network.

ERC-20 (Fungible) and ERC-271 (Non-fungible) tokens are also made possible with smart contract standards — Look out for our upcoming guide on NFTs!

ETH consensus mechanism

Decentralised applications (dApps) can be built on the Ethereum blockchain

As mentioned in our previous articles, Ethereum is currently using the Proof of Work (PoW) consensus mechanism which requires a substantial amount of time and energy. therefore reducing transaction time and costs. It’s also more environmentally sustainable – a characteristic which has quickly attracted .

It’s easy to purchase Ether (Eth) on Tokenize Exchange today! From June 1st, refer a friend and earn up to 20% comission from their trades.

The — EIP 1559 will introduce a for transactions on the Ethereum network. This will overcome the issue of having inconsistent and sometimes extremely high gas fees (transaction costs).

ETH PoW consensus mechanism

More importantly, the base fee (in Ether) will be burned — permanently removed from circulation, hence creating scarcity and enabling . This is a significant development which will also accelerate institutional interest.

It’s reported that Ethereum generated approximately 600 million dollars worth of fees in 2020; . Therefore, while it’s evident that Bitcoin will continue being a valuable commodity (Bitcoin is often described as “digital gold”), .

In short, it’s important to realise that cryptocurrencies are merely speculative assets.

The practical applications of the Ethereum blockchain across existing and emerging industries is a testament to the fact that .

Keep Tokenizing! Till next week.

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