Ethereum is a digital currency designed by Vitalik Buterin in 2014; its role is to create a platform where smart contracts can be developed. The ethereum currency is called ether and the intention behind the creation of ethereum is for it to become a world computer where people could perform different businesses, do transactions.
Ethereum and bitcoin share some similarities; they are both mediums of investment and also platforms where various transactions such as buying and selling of goods and services take place.
The difference between the two cryptocurrencies can be distinguished in the aim for which they were created, unlike bitcoin which aims at storing wealth, and eventually becoming a legal tender all over the world, ethereum aims at providing a platform where smart contracts can be developed and executed.
Ethereum can also be distinguished in its availability, whereas bitcoin system produces only 21million bitcoin, ethereum has no specified quantity. It also aims towards making the everyday life of an individual efficient and at less cost, also by eradicating activities of third parties and middle men from our system. Ether can be obtained by providing goods and services and requesting payment in the form of ether, through mining of ethers and also purchasing it from a credible ether broker.
Unlike bitcoin, transactions that take place in ethereum can be tracked down eventually to a particular source, this makes it impossible for ethereum to be used illegally but that doesn’t completely rule out the fact that it could be put into illegal use.
In ethereum mining, lots of designs are put into place to ensure that transactions takes place effectively and that the network is functional at all times. The designs are the miner and they are connected to the internet. This computer system use Lots of power and energy, huge companies could decide to maintain these computers so as to avoid failure or breakdown of the system. In cases like this, the companies are rewarded with ethers.
Keeping ether safe requires a private key. The private key controls the ether. It could be in physical or digital form. A safe way to ensure the security of the private key is in a mobile phone which should be stored in digital form. The only constraint to storing the private key on a mobile phone is in the case of loss of phone, these therefore imply loosing the private key.
Ethereum transactions are almost like the physical cash transactions, if your wallet is compromise or you send ether to the wrong person, the transaction is irreversible. There is also risk of failure of the network since it’s still new.
Like bitcoin, the value of ethereum is also determined by the number of people that accepts it. An increase in the number of people brings about an increase in the value of ethereum; however a decline in its use would lead to less value and price.