Developed in 2015, Ethereum is the second most popular and valuable cryptocurrency after Bitcoin, but it is also a programming language that runs on Ethereum blockchain technology. In 2013, the concept was described by a Bitcoin programmer named Vitalik Buterin, a Canadian citizen born in Russia in 1994. Buterin teamed up with Canadian entrepreneur Joseph Lubin to co-found Ethereum Switzerland GmbH in 2014.
Those mining the Ethereum blockchain mine for Ether and their reward is the Ether. Apart from being tradable cryptocurrency like Bitcoin, Ether can be used to pay for transactions on the network to where anything can be traded. The programming language for Ethereum is also different, and other programmes are running on Ether to code, decentralise, secure and trade anything. Microsoft’s recent partnership with ConsenSys offers an environment for cloud-based blockchain developers using Ether.
"There is nothing that Bitcoin can do which Ethereum can’t. While Ethereum is less battle-tested, it is moving faster, has better leadership, and has more developer mindshare." — Fred Ehrsam, co-founder of the digital currency exchange company Coinbase
Ethereum blockchains recording cryptocurrency transactions are created much faster than Bitcoin, taking seconds rather than minutes. Yet Ethereum was not set up to be an alternative to money like Bitcoin, but instead, it offers contracts and applications via its own currency to enable developers to build and run distributed applications.
Since 2017, Ethereum’s blockchain code has been popular as a launch pad for others since it allows developers to create their operations without limits, meaning that now thousands of applications are now more advanced than anything previously seen. These smart contracts are automatic programmes as long as specific requirements are met, where it is not possible for any form of external interference such as censorship, fraud or downtime to have an impact.
At the start of February 2019, Ethereum was sitting around £82 with a circulating supply of 105 million coins equalling a total volume exchanged of £1.42 billion. However, like all the cryptocurrencies, Ethereum had a volatile price journey trading at £667 just twelve months previously in February 2018.
The landscape continues to change for Ethereum. In 2019, developers from the Ethereum open-sourced community have cautiously agreed to implement mining hardware resistance to ASIC (application-specific integrated circuit). Whilst ASIC chips mine cryptocurrency more efficiently than GPUs and CPUs (central processing units), they are so expensive only the biggest companies can run them. Mining using ASIC chips would be blocked and replaced with general purpose, or GPU (graphics processing units) hardware, though it is unclear when this will take effect.
