CRYPTOCURRENCY 101 ETHERIUM

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9 Jan 2024

What is Ethereum and how does it differ from other cryptocurrencies like Bitcoin?Ethereum differs from other cryptocurrencies like Bitcoin in several key ways:

Smart Contract Functionality: Ethereum's functionality extends beyond being a digital currency to the creation of decentralized applications (dApps) and the execution of smart contracts1. This sets it apart from Bitcoin, which primarily serves as a store of value and a means of exchange.
Total Supply and Issuance: Ethereum has a different total supply and issuance model compared to Bitcoin. While Bitcoin has a finite supply of 21 million coins, Ethereum does not have a capped supply2. This difference in supply dynamics can impact their scarcity and value over time.
Blockchain Purpose: Ethereum is a decentralized blockchain platform that supports smart contracts and has its own cryptocurrency named Ether (ETH)3. In contrast, Bitcoin is primarily designed as a peer-to-peer digital currency and a store of value.

Use Cases: Ethereum's standout feature is its smart contract technology, which allows for the development of decentralized applications (dApps), non-fungible tokens (NFTs), and DeFi projects4. This sets it apart from Bitcoin, which is primarily used for financial transactions and as a digital store of value.

Consensus Mechanism: Ethereum has transitioned from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) mechanism, providing a more secure and energy-efficient means of transaction validation and blockchain augmentation5. This transition sets it apart from Bitcoin, which still relies on a PoW consensus mechanism.
Market Capitalization and Adoption: Ethereum is the second-largest cryptocurrency after Bitcoin in terms of market capitalization6. It has a strong presence in the development of decentralized applications and has experienced significant growth in its ecosystem.