Ethereum is the second largest cryptocurrency and at the same time the largest smart chain.
Ethereum is the largest decentralized smart chain blockchain, and most decentralized applications, smart contract platforms, DeFi projects, and stablecoins are built on it.
The main difference between Ethereum and bitcoin is that Ethereum does not have a fixed finite number of tokens. For BTC we know there will be a maximum of 21 million BTC, but for ETH no one knows what the final number will be.
Bitcoin inflation is 1.8% per year, which is very similar to gold inflation. However, unlike gold, BTC inflation will decrease every four years. For Ethereum, its inflation is around 4% annually. In the future, ETH inflation will mainly be decided by the community, so it is possible that it will increase, but it may also remain the same.
Ethereum is an essential cryptocurrency of the decentralized world, mainly because it introduced something we call smart contracts. These are decentralized applications that operate based on conditions pre-programmed by their developers. Security is ensured by the EVM – the Ethereum Virtual Machine, which is a device that uses the computing power of all ETH blockchain nodes.
As we mentioned before, ETH is currently the largest smart contract blockchain. It also owes this to the fact that it enabled other cryptocurrencies to function on its network with the help of the ERC-20 protocol, originally built for the needs of the Ethereum cryptocurrency.
Thanks to this option, thousands of other cryptocurrencies, referred to as ERC-20 tokens, have been created on this network.
Some of these tokens have found significant use. A prominent example of this are stablecoins such as Tether (USDT), which are tokens tied to a certain currency, for instance the US dollar, where 1 USDT = 1 USD.
DeFi projects have become a big hit on the Ethereum blockchain. DeFi is still in its early stages and represents a particularly risky investment.
Similarly to BTC, ETH works on the Proof-of-Work concept where it is mined using hardware called an ASIC miner. However, unlike BTC, it still uses graphics cards. The drawback of this solution is slower and more expensive transactions.
Ethereum is currently one of the strongest players on the market, but it also has its problems with slow transactions and sometimes high transaction fees. However, it will be upgrading to the new generation of Ethereum 2.0, which will fundamentally improve these issues.
Sources: ethereum.org, pixabay.com, decrypt.co