ethereum coin

Ethereum Chart

The 1 Minute Summary 

  • Ethereum is a network or super computer
  • Ether is the currency or ‘gas’ that gets stuff done on Ethereum. 
  • Ether is the 2nd largest crypto currency after Bitcoin
  • Ethereum uses blockchain technology like Bitcoin 
  • There is no upper limit on the supply of Ether (for now). However, there are limits to how many can be mined per year
  • Ethereum has been designed for all sorts of tasks to be formed in a decentralized way (not just transfers of money) 
  • DApps (Decentralised Apps) are being developed all of the time to achieve this
  • Smart contracts run on a layer in the network. These are rules that govern how the network makes decisions, eg A pays B when the date is x.
  • There are many other tokens that run on the Ethereum platform such as REN. Together they make the ecosystem even stronger. Read our “What is Shiba Inu?” article for another example
  • One of the main challenges with Ethereum is how to scale the network and the rising price of gas (Ether) . The new version, Ethereum 2.0 is trying to build momentum in that direction. 

The Deeper Dive

Ethereum and Ether
So what is Ethereum and what is Ether? These two crypto concepts aren’t as famous as Bitcoin, but they are catching up fast.

The first thing to understand is the difference between Ether and Ethereum. Just like Bitcoin, Ether is a cryptocurrency. You will sometimes hear people talking about Ethereum as a currency. That’s not strictly correct.

Ethereum is the world or platform it lives in. Ether “sometimes gets called the “gas” that powers the Ethereum world. It is also known as the Ethereum Token. There are other tokens that exist on the Ethereum platform (read our What is Polygon? article for a heads up), but Ether is the main player in town.

Just like dollars and euros (or any Fiat currency) in the physical world, Ether lets you do stuff on Ethereum and it pays for the network of people helping to keep the whole Ethereum project working.

Ether as a Store of Value
Just like Bitcoin (and Gold), Ether is becoming an attractive way of storing value and that’s because its price is going up. And that’s fine, but it’s also important to remember that Ether is only one part of the system. It also “greases the wheels” of the Ethereum platform. You have heard the expression “Money Makes the World Go Round” right? Well, “Ether Makes Ethereum Go Round”.

Inspired by Bitcoin: an Evolved Blockchain technology.
Ethereum, like Bitcoin, uses blockchain technology to operate. But then so does the stablecoin: USDT. Read our ‘Tether Explained‘ page for more information on that one.

So, how is Ethereum different? At a basic level, it means that actions are taken and checked, not in a centralised fashion such as when you stream a film on Netflix, or wire money to someone through your bank, but in a decentralised way by lots of different people who together form a hive or supercomputer. Kind of like when a group of people vote on something to do something.

A big group of people in the network have a record of all of the transactions and actions carried out on the platform so it’s very secure.

These individuals are called nodes, In the case of sending Ether (like Bitcoin) from one person to the next, all of these nodes are involved in recording and checking the transaction and they are paid a bit of Ether to do it. This has an advantage over a centralised method in that no one node has the power to alter or change the transaction.

How Many Ether are There?
This is where the Ethereum platform differs from Bitcoin which has a finite number of coins that it can mint.

As well as being a cryptocurrency, Ether is needed to power stuff on the platform. Each action you take requires you to pay some “gas” based on how much resource is needed to carry out the task.

While the bitcoin money supply has an upper limit of 21 million bitcoins, there is no similar limit to Ether. There is no fixed supply of Ether, which means it’s a lot more scaleable than other crypto currencies. 

Many investors believe that Ethereum will ultimately outperform Bitcoin, but having no upper cap on supply also has some risks for investors. This has some people worried about inflation in the Ethereum community. 

It’s a bit like the Fed printing money all of the time. The difference with Ether is that there is an upper limit. In 2017, for example, mining generated 9.2m ETH—a 10% increase. As of Jan 202, estimates put the total Ether supply at 114 million.

Of the ether currently circulating, 60 million was bought by users in a 2014 crowdfunding exercise.

An additional 12 million ether went to the Ethereum Foundation, a group of researchers and developers working on the underlying technology. 

And every 12 seconds, 5 ether (ETH) are paid to the miners that verify transactions on the network.

The new supply of ether is capped at 18 million ETH per year, defined by conditions that were accepted by all parties on the 2014 presale. 

The community continues to discuss setting an upper limit on the supply and whether to slow the supply growth rate with the upgrade: Ethereum 2.0

But Wait, there’s more to Ethereum than just Money.
There are lots of middlemen on the internet. In terms of money, they are the banks and payment companies like Visa. Mastercard and Paypal of course. When you rent a film, you might go through Netflix, when you post on social media you might go through Facebook and when you buy stocks and shares you might go through your broker.

The aim of Ethereum is to be the platform where all sorts of other transactions (not just money transfers) can take place in a decentralised fashion, so no-one controls or owns your personal information other than you. 

On the Ethereum network, these kinds of activities can take place (and be checked) automatically from person to person without having to use a broker.

The fundamental idea is the same: Blockchain technology. There is a public ledger (or record of transactions) that is shared across a decentralised network, not under the control of just one entity.

The people, or nodes, in the network are all incentivised to check that the transactions are being carried out correctly.

Sometimes Ethereum is called a World Computer made up of all these “worker” nodes. Think of it as a hive of bees where only the workers doing their job correctly get the honey.

What Else Can You Do on Ethereum?
If you head to the App Store or Google Play, you will see hundreds pf thousands of Apps. These are controlled centrally by Google and Apple in most cases. What Ethereum wants to do, is to offer a similarly rich selection of tools on Ethereum called DApps (Decentralised Apps). 

These offer anything from financial products, to social media apps all paid for with Ether (or gas) and powered by blockchain technology giving you control over your data (as there is no need to use centralised intermediaries).

Smart Contracts
One concept that is useful to understand when we are talking about Ethereum, is the idea of “Smart Contracts”. The clue is in the name, but a Smart Contract is a way of automating transactions intelligently if certain conditions are met. 

If Party A agrees something with Party B and all the people (or nodes) across the network know about it, then the network can take an action when the agreed conditions are met. There’s no need to go through a lawyer or any kind of intermediary. It’s automatic and secure, as multiple people are checking it. This can significantly increase efficiency in many areas.

The Ethereum Virtual Machine: the Node Brain
Ethereum has been designed to be the platform to facilitate just that. It’s not just money that you can manage across the network, but potentially any transaction, such as a loan, or a house purchase.

An example of a very simple smart contract would be someone sending 1 Ether to a friend, with the condition that the money can only be sent if at least 25mm of snow falls in Times Square, NY on Christmas Day. Information from the real world is pulled from “Oracles” to make these decisions. Read out ‘What is Chainlink?” article for more information on that one.

Everyone in the network knows the amount (and conditions) of the agreement as it is on the Public Ledger. The Ether  is only sent if the conditions are met.  

To carry out these kinds of decisions, each individual or node on the Ethereum network has a “brain” called an  Ethereum Virtual Machine (EVM) that deals with smart contracts. All the nodes run in sync with each other.

The EVM is the Ethereum “Judge” if you like.


  • The Ethereum Token (Ether) is the second biggest cryptocurrency by market capitalisation. It’s the #2 brand
  • Because Ethereum is a platform, not just a currency, it has big potential
  • Other tokens are being launched on the Ethereum platform, some of which are successful in their own right (Chainlink for example). And this makes the whole ecosystem even stronger.


  • The flipside to having so many potential uses? It’s more difficult to understand and that could slow mainstream adoption.
  • Because there is more to record on the public ledger (record of transactions, conditions and state of the Smart Contracts) and so on, it is more difficult to scale. Every transaction and smart contract call is there in the blockchain. That is one of the drivers behind Ethereum 2.0 an update of the network.

Proof of Work
So how does Ethereum check that transactions and smart contracts are executed correctly, by the book? This is done by thousands of nodes across the network and the whole process is called Proof of Work.

Going back to our bee hive analogy, all of the worker bees have the same copy of the history of the transactions and smart contracts in Ethereum. Each time there is a new action, all of the nodes on the network need to agree on any new additions to the ledger. 

The process is similar to Bitcoin, and they are the people who police the whole thing to make sure (for example) that their Ether tokens are only spent once. The people who do most of the work (and are paid for it) are the miners.

Multiple Miners help check the changes from state to state, instead of a central authority. There is talk of eventually moving to a different system called Proof of Stake in the future which uses less energy and is more secure. For the moment, however, Ethereum follows the Bitcoin method: Proof of Work. 

Why Mine?
The two main reasons are to issue Ether currency (ie mint Ether) in a decentralised way and to check that all the transactions across the network are correct. Miners help to acheive this through the Proof of Work algorithm and are rewarded with Ether.

What the miners are doing is solving puzzles (essentially producing random numbers until they stumble upon the answer). A correct answer releases a block of transactions to the miner. These blocks are sent to the nodes on the network who validate the blocks. They check the hash value of the block which is essentially a quick way of validating it. Think of it as a fingerprint.

The nodes on the Ethereum network verify that the hash value is correct. If it is, the miner gets the thumbs up. If it´s not, they reject the miner’s block.

In the successful case, the miner unlocks the ether and sends the block across the network for each node to validate and add to their own copy of the Ethereum ledger. All the other miners stop work on that block and move onto the next available block of transactions.

As well as DApps, developers are working on DAOs for Ethereum (Decentralised Autonomous Organisations). We aren´t there yet on this, but the idea is to run automated organisations on the Etherum platform that will run automatically on pre agreed rules. A social network on the Blockchain is just one example. This would enable companies to be steered by their investors rather than a hierarchical chain of command.

Other Cryptocurrencies
Another thing that is peculiar to Ethereum is that it also supports a number of other cryptocurrencies (in addition to Ether). Again, that makes the whole project much more scalable and flexible. As the demand for decentralized services grows, Ethereum will benefit from successful altcoins that run on its platform.


Short Summary to go here…….

Ethereum Mini Glossary ….to be completed

Smart Contracts

Frequently Asked Questions

What’s the smallest denomination of Ether?
The smallest unit of ETH is known as a Wei and is equal to 10-18 ETH. 

Is the Total Supply of Ethereum Capped?
No, unlike Bitcoin, which is capped at 21million BTC, the supply of Ether is not capped. There is an upper limit of how much can be minted each year of 18 million. This situation is likely to change in the future either by reducing the annual quota in Etherium 2.0, or by setting a total cap, or by setting up a mechanism to expire some Ehther in certain cases.