You must have heard about Ethereum, but have you ever wondered, what is Ether?
In today’s article, we will go through the topic and understand its importance in the Ethereum blockchain.
But, before we start, we need to understand what Ethereum is? Ethereum is a mix of both decentralized app store which powers Dapps and also as a decentralized internet. It is a platform that hosts Dapps. This leads us to our second question, what does ether mean? And, how is it connected with Ethereum? Let’s explore.
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What is Ether? Ethereum Cryptocurrency
Ether can be defined as the fuel that powers the Ethereum platform. To power Ethereum, we need a digital currency that will be used. For example, if a machine executes an operation on the network, it would require resources to do so. In this case, ether is used. It also acts as an incentive to other entities connected with the platform to develop applications(DApps). Developers, for example, can be compensated for writing useful applications. In the simplest form, we can define Ether as digital oil to fuel the transactions on the network. It can be any operation, create, delete or modify.
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Origin of Ether
To better understand ether, we need to look at its origin. Ether is first distributed during its first presale.
Almost 60m ether was sold to the contributors in the presale. Not only that, 12 million ether (12% of the created ether) is given to Ethereum Foundations. All these ether is given to the group of developers and researchers so that they can improve the underlying technology of Ethereum platform.
Ether is also created when a new block is mined. Miner gets the ether.
Last, but not the least, some ether (2-3) is created as uncle/aunt reward. It is only generated when another block solves the problem even without it being included in the miner solution
So, does it mean that there is infinite Ether supply?
Of course not. Most of the digital currency is always limited. This is done to prevent overflooding of the market. It also helps to control the price of the ether in the market. When it was first released, it was decided that there will be a limited quantity of ether. However, no one has an idea on the number of ether that is in circulation.
Generally, any cryptocurrency number decreases after certain years. The case with ether is the same. As the years are passing by, there is less ether to be mined or rewarded.
But, the rate at which the ether has been depleting will not change. Ethereum is now moving from Proof of Work(PoW) to Proof of Stake(PoS). All these are done to save energy and make Ethereum platform more efficient and nature-friendly.
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Use of Ether
The following entities also use ether.
- Developers for developing apps on the blockchain Technology.
- Any user who is interacting with smart contracts.
Mining ether is easy. All you need is computational power to solve problems on the Ethereum platform. If you mine a block, you will be rewarded with some ether. The reward amount depends on multiple factors including the amount of work you have done. Mining ether is comparatively easy compared to Bitcoin. Almost every 15 seconds, a new block is created and added to the blockchain. Once the block is added, three ether is given away to the miner(s). Ether follows Proof of Work(PoW), and that’s what makes it minable in the first place.
However, don’t get your hopes high. Its difficulty has risen a lot in the past six or so months. Also, Ethereum will soon be changing to Proof of Stake(PoS).
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If you are into trading, you will already know about BTC pairing. You can buy any other coin in the market if you have BTC. The pairing looks like, “EOS/BTC” or “ADA/BTC.” Similarly, ether can be used as a pair to buy other cryptocurrencies.
If you want to learn more about ETH, then you must read this article: What is Ethereum Classic (ETH)?
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Ether is here to stay. It has proven to be the fuel of one of the second generation of blockchain technology, Ethereum. So, what do you think about it? Let us know in the comment section below.