When I started out, I believed Ether and Ethereum to be the same thing - a booming digital asset. However that is not the case, it’s much, much deeper. Ether is a “gas” or form of payment made by clients of the platform to the machines executing the requests on the network. Ether also acts as an incentive for developers to write quality and healthy applications for the network and to allow users to interact and access smart contracts on the blockchain.
Ethereum? Ether? What’s the Difference?
Ethereum is an open-source, public, blockchain-based distributed computing platform which can execute scripts (or smart contracts) in the Ethereum Virtual Machine (EVM). The Ethereum platform provides a cryptocurrency (or token) called Ether.
Related: A Beginners Guide to Ethereum Tokens
When people say they are buying “Ethereum”, they actually mean that they have bought a stake in the total number of Ethereum issued. The same works in the offline world, you would own 10% of a company if you had 10 out of the 100 available shares. In both cases, the value can increase or decrease depending on the market.
Every day as more blocks are found, more ether is issued (since Ethereum has no capped limit) and your stake in Ethereum decreases (you own less of a stake than when you bought). However, the value of the stake will go up as more people buy and sell ether.
Ether is also used to buy “gas”, which is used for executing requests and smart contracts on the network.
To summarize, Ether is the spendable coin you are getting when you “buy ethereum” on an exchange like coinbase. You are getting a portion of the total Ethereum issued and the ability to execute smart contracts.
How Ether is Generated
A total of 60,000,000 ether was created after the pre sale and the issuance of ether has a cap of 18,000,000 per year.
The Ethereum network is kept running by computers all over the world. In order to reward the computational costs of both processing the contracts and securing the network, there is a 5 ether reward (which may be lowered soon) that is given to the computer that was able to create the latest block on the chain (about every 12-15 seconds).
Due to the nature of the algorithm for block generation, this process is guaranteed to be random and rewards are given in proportion to the computing power of each individual machine.
So now you know the difference between Ether and Ethereum! Be on the lookout for some special content from us coming soon, some big things are coming and you’ll want to be here when it does!
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