Ether and Ethereum difference explained

ethereum ether difference explained

The words ‘Ethereum‘ and ‘Ether‘ are among the most commonly heard words in Blockchain and Cryptocurrency world. Ethereum and Ether, when used synonymously, represent the 2nd largest cryptocurrency by market cap.

People often confuse both the words to be one and the same but however, they are not. This synonymous usage is similar is relatable to the usage of the word Xerox for photocopying.

So what is the difference between Ethereum and Ether?

Ethereum is an open source, public blockchain platform with support for smart contract (scripting) functionality. First proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher, and programmer, the system went live on 30 July 2015. The Ethereum blockchain network provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. This functionality offers developers to build decentralized apps, run smart contracts.

Ethereum Tokens issued on the blockchain network are referred as Ether.  The tokens are used as a currency on the Ethereum network to reward miners who solve complex mathematical problems and developers who keep the network afloat. Ether (ETH) is also used as a reward for running DApps, enabling smart contracts, generating tokens during ICOs. Further, Ether is used for making standard P2P payments similar to the usage of Bitcoin for payments.

Ether is defined on as follows:

Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations.

Unlike Bitcoin which has a supply cap of 21 million, Ether has no cap on maximum supply. Of the total Ether in circulation 60 million were purchased in a crowdfunding campaign in 2014. Another 20 million were allocated to Ethereum Foundation, that is responsible for the underlying technology. Further, every few minutes certain number of new Ether are allocated to the miners who verify the transactions.

Total Ether in circulation at the time of writing this post is 97,418,781.94

In short:

  • Ether is a fuel that keeps the vehicle named Ethereum running.
  • Ethereum is a platform and Ether is a cryptocurrency.
  • You trade in ‘Ether’ and not ‘Ethereum’

About the author

Krishna KP

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