Ether (ETH), commonly referred to as “Ethereum,” is the cryptocurrency that powers the Ethereum blockchain. The Ethereum blockchain has grown into the most actively used blockchain in the world, and ETH is now the second-largest cryptocurrency by market cap behind bitcoin.
Ethereum blockchain vs. Bitcoin blockchain
The Ethereum blockchain was launched in 2015 as a technology that builds on Bitcoin’s innovation, with some key differences. Both the Bitcoin and the Ethereum blockchains allow users to use digital money (coins) without payment providers or banks. But Ethereum’s general programmability goes far beyond the Bitcoin blockchain’s simple balance transfers.
Ethereum is the world’s first programmable blockchain, which is to say all value is programmable. “Smart contracts” implement if/then logic into money itself. Imagine you have a $1 bill into which you can implant computer code. For example: if spending the $1 at a grocery store, then approve the transaction; if spending the $1 at a candy store, then reject the transaction. Ethereum introduces this into every asset, and in doing so, it significantly expands the world’s choices for interacting with money and other digital asset tokens.
The Ethereum blockchain’s open-source rails allow for the development of decentralized finance (DeFi) applications, which live on Ethereum and use smart contracts as their backend servers. In particular, Ethereum has enabled a suite of open-source lending, exchange, and yield-bearing protocols, 17 of which are now valued at more than $1 billion.
Our hypothesis: ETH’s value will grow as the Ethereum blockchain solidifies its position as the preferred platform for value-integrated digital interaction.
What is decentralized finance?
DeFi is a global, open alternative to traditional financial services built primarily on the Ethereum blockchain. Advancements in blockchain technology empower DeFi developers to recreate the architecture of legacy financial systems with a code-based digital infrastructure of DeFi apps. These apps replicate traditional financial functions such as borrowing, lending, and exchanging assets, and they do so in a permissionless manner without relying on traditional financial intermediaries. As DeFi continues surging, we believe there is potential for Ethereum’s expansion to continue.