5 things to know about Ethereum

Ethereum (ETH) is all the rage these days. Its been hit all time highs, increasing its marketshare and has been making headlines as the network for NFTs, the tokens that let you own digital art and more.

Ethereum is now the second most popular cryptocurrency behind Bitcoin. And while Bitcoin has had a great year so far too, reaching its own all time highs and moving even further into the mainstream with adoption by large investment firms, it may be losing its status as the crypto world’s favorite along with losing market share.

What’s so special about Ethereum? A lot of things. Here are five things I learned about ETH that helped me better understand what the coin is, how it’s used and why it’s growing so fast.

1. It wasn’t built to compete with Bitcoin.

Bitcoin was created to challenge traditional currencies. It revolutionized digital money by using a public blockchain system to manage transactions. Ethereum was built to create smart contracts and decentralized applications called dapps.

2. You can blame it on the blockchain.

Once Bitcoin revolutionized the use of blockchain technology, other use-cases started popping up. Ethereum’s innovation is the Smart Contracts and dapps it was built to execute. Building smart contracts into the blockchain makes their terms immutable/permanent and it lets the contract execute when certain thresholds are met - no more ‘takesies backsies.’ Dapps are applications built on a decentralized blockchain.

3. Ethereum can...do things.

Blocks on Bitcoin’s chain contain a unique answer to a difficult-to-solve puzzle among other things. Ethereum blocks can contain working code that when run can do a variety of things. Smart Contracts work with Ethereum because the code in the block puts them into action

It’s homebase for NFTs

NFTs are essentially tokens representing digital content. The ownership of those tokens is tied into the Ethereum blockchain because of the things it can do (as mentioned above). NFTs have been booming in popularity, selling for large sums of money and potentially changing the way ownership is viewed.

Energy conservation is a fringe benefit

Bitcoin’s system for creating new blocks is energy-inefficient. Mining and transacting Bitcoin uses at least as much energy per year as Sweden because it requires computers to do work (use computing power) in order to win the block. Ethereum currently uses the same system but has plans to change their system to a new one where blocks are forged instead of mined and are awarded based on a combination of your coin quantity and random assignment.

The new system also means more people will be able to participate in the ETH network because you’ll no longer need the expensive technology needed for Bitcoin-style mining. The change was proposed to take place this year, but may take until next year to fully integrate.