Unless you’ve been living under a rock, odds are you’ve heard of Ethereum. So, what is Ethereum? In short, it’s a framework that allows you to store digital money, handle global payments, and – perhaps most importantly – to build next-gen Web3 applications. Whether you are interested in understanding cryptocurrencies or looking to use your development skills, understanding the basics of Ethereum is an essential topic to understand. Moreover, given the fact that Ethereum is the leading and most widely used blockchain, it’s important to know what Ethereum is. Therefore, we’re going to educate you in this guide so you can answer “what is Ethereum?” with confidence.
In this full guide regarding Ethereum, we will not only answer “what is Ethereum?”, but we’ll also take a closer look at various important aspects of Ethereum’s decentralized network. In addition, we’ll explore the topic of “what is the difference between Bitcoin and Ethereum?”. While both blockchains share similar concepts, they are distinctively different in their use cases. Furthermore, considering the fact that Ethereum has one of its largest upgrades in the pipeline, we’ll also go over what Ethereum 2.0 is.
Nonetheless, knowledge alone is valuable, but the true power lies in combining it with taking action. Thus, we encourage you to put the information obtained herein to use by focusing on developing Web3 applications. With the help of Moralis, you can do this with minimal effort and with quick turnarounds. Moralis makes Ethereum development easier than ever before – bridge the gap between the ease of Web2 development and the powerful functionality of Web3 with Moralis!
What is Ethereum?
Today, Ethereum is one of many blockchain networks. However, Ethereum is the largest blockchain for dApp development. Before getting into the specifics, however, let us first look at some of the basics. The Ethereum network includes its own native token called Ether (ETH), which is a cryptocurrency with the second largest market cap (at the time of writing). Furthermore, following the definition of “blockchain”, Ethereum is a decentralized public ledger that verifies and records transactions on its network.
As stated on ethereum.org, Ethereum provides open access to digital money and data-friendly services for basically anyone with internet access. Whether someone is from China, U.S.A, Europe, Africa, or anywhere else in the world, they can access this community-built technology and countless applications operating on top of it.
The Ethereum network enables users to send its native cryptocurrency, as well as other chain-compatible tokens to anyone with an active ETH address for a fee. Moreover, the network also powers applications in various sectors (financial, gaming, marketing, etc.) that are accessible to everyone and that no one can remove. These sorts of applications are known as decentralized applications or dApps, and also Web3 applications. These applications are also one of the key elements when discussing the “what is the difference between Bitcoin and Ethereum?” topic, as we’ll discover later on in this article.
Ethereum – A Decentralized Network
The creation of dApps on Ethereum is possible thanks to the fact that Ethereum is programmable and enables the use of smart contracts. The latter are able to perform specific actions when certain predefined conditions have been met.
Moreover, Ethereum was the first blockchain that offered such functionality, attracting many developers inclined in favor of a decentralized future. Despite the fact that several other chains offer similar functionalities as Ethereum, its early start created an extensive worldwide community which gives the entire network its value. As such, countless other projects have already been built on top of this widely accepted blockchain, with new ones emerging daily. This includes thousands of ERC-20 tokens, NFTs, DEXs (decentralized exchanges), and many other dApps covering a wide range of sectors. Essentially, all Ethereum network users have an option to create, publish, monetize, and use all applications available in the ecosystem.
Building on Top of Ethereum
Whether you are looking to send ERC-20 tokens, create your own NFTs, or create dApps, Moralis can help you accomplish this quickly and easily. That means that you won’t be wasting time by running your own node and building infrastructure around an RPC node. With Moralis on your side, you jump straight to the interesting part and can thus create the best user experience while saving time and other precious resources.
What is Ether (ETH)?
As mentioned previously, Ether or ETH is the native cryptocurrency of Ethereum. It serves as an asset to pay for transactions on the Ethereum network. The latter is known as “gas” as it varies quite a lot depending on the current amount of transactions being performed on the network. Of course, ETH may also be used to store value or serve as a form of money to pay for goods and services from merchants that accept it as a payment method. Moreover, it may easily be transferred among anyone using the network or used to access the complete functionality of specific dApps.
On ethereum.org, it refers to Ether as “currency for our digital future”, while explaining that ETH is digital, global money. Essentially, ETH is the currency of all Ethereum applications.
Here are some of the key properties of Ether (ETH):
- ETH enables you to be your own bank, in full control of your funds.
- You need to have a digital wallet to store Ether.
- It is secured by cryptography.
- Following Bitcoin’s lead, it was designed for peer-to-peer payments.
- There is no centralized control – ETH is decentralized and global.
- Anyone with an internet connection and a digital wallet can accept ETH.
- Ether is divisible up to 18 decimal places, which means fractions of 1 ETH at a time can be purchased and transferred.
- Ether fuels and secures Ethereum.
- For now, miners are rewarded with ETH (for more info, see the “What is Ethereum 2.0?” section).
- Using financial tools built on top of Ethereum (known as DeFi [decentralized finance]), you can borrow, lend, and earn interest in ETH.
- You can trade ETH for other coins and tokens using DEXs or CEXs (centralized exchanges).
- Considering the fact that Ethereum is programmable, there are more and more use cases of Ether every day.
How to Get ETH?
There are several ways to get ETH. Once you create your own wallet (or use one provided by CEXs, such as e.g. Coinbase), you’ll need to use some sort of fiat gateway to convert your fiat money into Ether. This option is available within CEXs and some crypto wallets, including the most popular one – MetaMask.
Moreover, you can also get ETH from another person (peer) if they are willing to send it to you. However, before asking anyone to send you Ether for free, keep in mind that ETH is expected to appreciate in value due to the given current track record. As such, there are rare individuals willing to part from their ETH.
What is the Difference Between Bitcoin and Ethereum?
It’s basically impossible to discuss Ethereum without addressing the “what is the difference between Bitcoin and Ethereum?” question. Moreover, if you are familiar with Bitcoin and have read the “What is Ethereum?” section above, you can probably answer this question yourself. However, to make sure that even complete beginners to the crypto realm do not get left behind, let’s explain this in further detail.
So, what is the difference between Bitcoin and Ethereum? Well, there are quite many differences. For one, Ethereum and Bitcoin are two different blockchains. They each have their own cryptocurrency – BTC and ETH, respectively. Moreover, Bitcoin has a noticeably larger market cap than Ethereum and thus a larger market share, which is also known as Bitcoin dominance. Furthermore, Bitcoin was created first (in 2009), years before Ethereum was launched (in 2015). Actually, it was Bitcoin that inspired the creation of Ethereum. Also, Bitcoin founders are anonymous, and they go by the name of Satoshi Nakamoto, while Ethereum founders are publicly known, with Vitalik Buterin being the one most known to the public.
Moreover, Ethereum and Bitcoin run on different algorithms; Bitcoin uses SHA-256, while Ethereum uses an algorithm called “Ethash”. They also have different block times; Bitcoin’s are in minutes, while Ethereum’s are in seconds. Of course, we could find other differences of lower significance between the two blockchains and their currencies. However, let us instead focus on the most important answer to the “what is the difference between Bitcoin and Ethereum?” question.
Smart Contracts and Ethereum’s Programmability
While all of the above differences may be interesting, the key difference began to take shape when Ethereum founders proposed to utilize blockchain technology for more than just maintaining a decentralized payment network. As such, they found a way to store computer code on the blockchain and made Ethereum programmable. This important distinction and its implementation led to the birth of smart contracts, dApps, and an extensive ecosystem that Ethereum is today.
Nonetheless, we must mention that this key distinction between Bitcoin and Ethereum may be gapped in the future since there is more serious talk about deploying smart contracts on Bitcoin’s blockchain as well.
It’s important to note that Ethereum wasn’t created to compete with Bitcoin but rather to complement it. Bitcoin’s primary aim was to serve as an alternative to national currencies. As such, it sought to be a store of value and a medium of exchange. On the other hand, Ethereum’s goal was to be a platform for facilitating immutable, decentralized programs and applications powered by its currency.
What is Ethereum 2.0?
If you’ve been reading crypto news, then you must have heard about Ethereum 2.0. This full guide to Ethereum wouldn’t be complete without addressing this critical upgrade that is coming to the Ethereum network.
So, what is Ethereum 2.0? Ethereum 2.0, or Eth2, is a set of interconnected upgrades to make the Ethereum network more secure. Additionally, it will become more scalable and sustainable – by moving from proof-of-work (PoW) to proof-of-stake (PoS).
Eth2 has three stages:
- The Beacon Chain – This stage brings staking to Ethereum and sets the stage for future stages of the Eth2 upgrade. Moreover, eventually, the Beacon chain will coordinate the upgraded system.
- The Merge – The current Ethereum mainnet will “merge” with the Beacon chain to bring staking to the entire network. This will also signal the end of energy-intensive mining.
- Shard Chains – This final stage of the Ethereum 2.0 upgrade will expand Ethereum’s capacity to process transactions and store data. Additional features of the shards will be rolled out in multiple phases.
The Ethereum 2.0 upgrade has already begun, and its first stage was successfully completed in December 2020. Since then, many people have already started staking Ethereum 2.0. While the exact dates for the final stages of the Ethereum 2.0 upgrade haven’t been provided, they’re estimated to take part during 2021 and 2022.
What is Ethereum 2.0? – Be Prepared
When it comes to ETH holders or dApp users, they don’t need to do anything as the entire transition will be done seamlessly. However, as far as developers and those interested in staking ETH are concerned, they have a chance to get involved. The latter can be done by running a client, staking ETH, or finding bugs by testing Eth2. For more details, visit ethereum.org.
What is Ethereum? – Summary
We hope this guide about Ethereum inspires you to dive deeper into Web3 development. By knowing that there is much more to crypto than price speculation and trading, your creativity might be kicking in. With the use of smart contracts and dApps, Ethereum might be the blockchain of choice for your next project. Of course, you may also decide to keep things light and fun by focusing on providing fellow humans with entertainment, for instance, by joining or starting a project in the decentralized gaming sector.
Whichever path you take, Moralis is here to assist you. Not only by providing you with all the tools but also with guidance. On Moralis’ blog and Moralis’ YouTube channel, you can find a ton of articles and videos explaining various crypto concepts as well as detailed guides of example projects. For instance, you can learn how to create your own ERC-20 token or how to create a DEX.