What is Ethereum? The new Bitcoin that is on the rise

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What is Ethereum? The new Bitcoin that is on the rise

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Author Ben Leonard

Move over Bitcoin, there’s a new crypto currency on the rise. Ethereum is the new currency that you’ve never heard of but is taking off.

Bitcoin has been making the news a lot lately, least of all for its impressive growth in value – well above all other currencies. Ethereum is similar to Bitcoin, it’s also an open-source, public, blockchain-based distributed computing platform that focuses on smart contract functionality.

Also like Bitcoin, Ethereum is a digital cryptocurrency that can be used to pay for things online, as long the retailer accepts it. It’s also “mined” using scripts on an international network of public nodes. However, unlike Bitcoin, which routinely makes the headlines, Ethereum tends to stay out of the spotlight.

This doesn’t mean that Ethereum is any less valuable than Bitcoin though. In fact, Ethereum has been creeping up on the value of Bitcoin while nobody noticed.

ethereum

Ethereum was launched in 2015, but over the past year, the value of ether (ethereum’s currency) has increased more than 2,300%. One ether can set you back £230.

Smart Contracts

There’s one big difference between Bitcoin, however. Ethereum runs on something called ‘smart contracts’, whereas Bitcoin doesn’t. The mechanism behind these smart contracts are complicated (although you can read up on it here), but it basically means that they use an “if: then” system. This means that Ethereum can only be traded if certain conditions are met.

What it means to anyone using Ethereum is that you can set ‘if’ conditions to trade your currency. For example, you could place a bet using Ethereum on a sporting team to win, but set the ‘if’ condition to only pay out if the team actually wins.

Another way to look at this is to get around any potential fees, like when you use Kickstarter or GoFundMe. These platforms often charge fees, irrespective of whether the projects reach their target goals.

By using Ethereum, you can set the conditions to mean that your money is only taken out if the projects reach their goal. And even then, it would be taken out without fees.

What’s fuelling the rise in Ethereum?

Ethereum has seen a marked rise in value largely due to the interest shown in crypto currencies, as a result of the large amount of press that Bitcoin has received. It’s also received backing from a lot of larger organisations, such as Microsoft, JP Morgan and Intel.

Whilst the price of Ethereum has increased a lot more slowly than Bitcoin, it was only valued at $10 for the first 18 months, it started dramatically climbing during March of 2017. It peaked at $395 in June of 2017, before dropping to $155 a month later and then rising again.

The dramatic dip was caused by security concerns for the cryptocurrency, as well as general market wobbles, including sell-offs by big investors.

Back in July, a piece of news was spread that the founder of Ethereum, Vitalik Buterin, had died. Although it was proven to be a false rumour, this didn’t stop the currency from dropping more than 20%.

So it’s worth investing in Ethereum?

Ethereum, like all cryptocurrencies, currently seems like a good investment, with many investors becoming millionaires overnight. However, many investors have warned against investing in cryptocurrencies, saying that the growing bubble could burst at any time.

By | 2018-05-30T10:07:23+00:00 August 28th, 2017|Personal Finance, Technology|0 Comments

About the Author:

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Ben is a Journalist with an extensive track record within most media, including TV, radio, press and direct marketing. Specialising in finance and business writing, Ben draws upon his extensive experience to craft compelling articles that provide valuable information to CLNews readers in a format that is easy to understand.

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