What is Ether? Fuel of the Ethereum Network

Many people make a common mistake when it comes to the Ether cryptocurrency. They identify it as Ethereum. This is the platform upon which it is based, not the token itself. The token is called Ether, and it functions as a type of gas or fuel that powers applications and functions on the Ethereum blockchain. No one owns Ethereum. They only own Ether.

The Fuel of the Ethereum Network

Ethereum has what are perhaps considered to be lofty goals in comparison to other cryptocurrency platforms. It was developed to be a complete solution for building a decentralized Internet, decentralized applications, and more. By it’s use of Dapps and Smart Contracts, Ethereum is very innovative. It has the capacity to do much more than Bitcoin.

The platform is available for anyone to use, and it is not owned by any specific entity. However, there is a built-in system that allows for payments to be made for resources to run Dapps and administer Smart Contracts. The network requires a cryptographic code or token in order to support its vast resources and enable peer-to-peer purchases for services. This token is known as Ether.

Ether is similar to Bitcoin in some regards. It is essentially a bearer asset like other securities. There are no third-party processors that are required to make Ether transactions. The difference between the two tokens is that Ether is not regarded as a standard security that can be exchanged for goods and services. Rather it is what provides “fuel” for the decentralized apps on the network.

Yes, it sounds complicated. But let’s boil it down to the fact that you are using Ether to pay for transactions that you make on the Ethereum blockchain. In this case, a transaction might be recording a document or updating a notebook. Every action on the Ethereum blockchain has a price that is reflected in terms of how much Ether is required to power or “gas up” the action.

Ether can also be mined just like Bitcoin, although it uses a different algorithm to reward individuals that process and verify transactions on the network. There is a maximum of 18 million Ether than can be mined in a given year. About five Ether are created every 12 seconds on the network.

Ether As a Traded Security

Although Ether is not really designed to be a medium of exchange like Bitcoin, it still serves as an investment vehicle for many people. Ether can be found on all of the top cryptocurrency exchanges where it is traded and assigned a value. The price of Ether can rise or fall on a given day, just like Bitcoin.

Many people have speculated that Ether may have more investment potential than Bitcoin because the Ethereum blockchain is so versatile. It has already been used to create other altcoins, and many institutions are exploring how Ethereum might become a model for their own blockchain development.

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