Bitcoin gets the lion’s share of the attention in the cryptocurrency space.
But Bitcoin isn’t even the best-performing cryptocurrency around — especially now that it has lost 40% of its value from its peak at the start of this week to around $12,000. That means Bitcoin is up around 12-fold this year.
By comparison, rival Ethereum has seen its value jump more than 60 times from $8.40 at the beginning of the year to around $530, and that’s counting Friday’s big across-the-board slide in cryptocurrency prices.
What is Ethereum? And does it deserve the same exuberance (rational or otherwise) that Bitcoin is garnering today? Here’s everything you need to know.
1. Ethereum is the second-largest cryptocurrency in the world.
The total value of “Ether” in the global marketplace is more than $53 billion.
While that still pales in comparison to the $205 billion value on Bitcoins circulating around the world, ethereum is well ahead of other major digital currencies such as Ripple ($21 billion), Litecoin ($10 billion), and IOTA ($9 billion).
2. Ether can be “mined” like Bitcoin, but with a key difference.
Both Ethereum and Bitcoin rely on so-called blockchain technology, a system in which transactions are not recorded and verified by a central bank or institution but rather by a decentralized network of cryptocurrency users.
As incentive for those users to serve this function, they are allowed “mine” for new Bitcoin or Ether to create wealth.
So from that perspective, Bitcoin is maturing fast.
3. Think of Ethereum as digital currency on steroids.
Bitcoin revolutionized digital currencies in 2009 with the introduction of blockchain technology to record, verify, and protect basic financial transactions using Bitcoins as tokens. Emphasis on the word “basic.”
Ethereum launched in 2014 with the notion of creating a smarter blockchain.
For instance, “smart contract” capabilities are built into Ethereum’s blockchain, allowing transactions to be held until contractual agreements or terms are met.