Ether and Ethereum are terms that are often used in the same context… but they are two completely different things. In this post, I’ll explain to you the difference between Ether and Ethereum in small chunks that are easy to understand.
What is the difference between ethereum and ether?
Keeping it short and simple, the main difference between ethereum and ether is that the first one is a network, while the latter is the “fuel” used to power the network.
Please keep in mind that ether is not actually fuel. But that’s exactly its purpose for the ethereum network.
Now that you know more or less what we are talking about, let’s dive into the details.
What is ethereum?
Ethereum is a decentralized platform that is used to run smart contracts. These smart contracts are programmed in the form of dapps (decentralized apps). And well, dapps will completely change the world as you know it now. Some of its real-world applications are in the Healthcare industry, banking, and privacy. I wrote a very detailed post about real world uses of ethereum some while ago. Feel free to check it out here.
Ethereum also enables programmers to build cryptocurrencies based on its technology, since it is completely open source. Ever heard the word “ICO”? It is an abbreviation for “Inital Coin Offering”, and is similar to what an IPO is in the stock market. There have been cases where ICO’s recollected millions of dollars in just seconds. Making the creators millionaires in less than a minute (literally).
Some experts also refer to it as the world computer. Which in my opinion is a very accurate description.
What is ether?
Just like an airplane needs fuel, ethereum does too. And ethereum’ s fuel is what is referred to as ether. And just like regular oil, ether can also be bought and sold, and its price also fluctuates based on the offer and demand law.
In a more technical way, ether is defined as the incentive provided to miners and to developers to keep the ethereum network safe and efficient.
Just like any other asset, ether is not infinite. Although it is a computer program, it cannot be replicated infinitely. Before the pre-sale in 2014, it was agreed by all invested parties that the supply should be limited to 18 million ether per year and in that 60 million ether should be made available right from the beginning.
It is important to note that out of the initial 60 million ether that was created for the pre-sale, only 48 million were available to the public. The rest were added to the development fund, which is used to finance projects of the Ethereum Foundation.
So, when somebody says that he has invested in ethereum, he has actually bought ether.
We wrote a very detailed post about what exactly ether is. Check it out if you want to learn more about it.
There are 3 main differences between ether and ethereum.
- Ethereum is a network. Ether is the crypto-fuel used to power the network
- Ethereum cannot be traded. Ether can be traded and appreciates or depreciates in value.
- Ethereum has lots of real-life uses (health care, banking etc). Ether’s only use is to keep the ethereum network running.