What is Ether?
Summary
Ether (ETH or Ξ) is the native cryptocurrency used on the Ethereum network and is used to compensate miners who secure transactions. A planned upgrade to the Ethereum protocol in 2019-2021 would replace mining with a less computationally expensive Proof of Stake mechanism which will be secured by validators, who are also expected to receive a proportional compensation in Ether. Ether also has many current use cases, such as a store of value (e.g. in lending collateral), a medium of exchange (e.g. in trade and payments), and a unit of account (e.g. in digital marketplaces).
Ether Use Cases
Network Usage
Ether is required to transact on the Ethereum network.
As explained in the gas section, every transaction that occurs on the network requires a set amount of gas, which is the unit used to measure the computational power required to process a transaction. To process a transaction and include it in a block, miners are expected to be compensated for this task. This is accomplished by setting a gas price with every transaction, which is the cost of 1 unit of gas, denominated in Gwei (1 ETH = 1,000,000,000 Gwei).
For example, when you simply send ETH from one account to another, this cost 21,000 gas. If you were to set a gas price of 1 Gwei, this transaction would cost 0.000021 ETH.
Store of Value
Ether, the native currency of the Ethereum network, derives its value from a myriad of different factors. It is used within the Ethereum network to perform a range of functions, including:
used to pay Ethereum transaction fees (in the form of ‘gas’), used as collateral for a wide range of open finance applications (MakerDAO, Compound), can be lent or borrowed (Dharma), accepted as payment by certain retailers and service providers use it as a medium of exchange to purchase Ethereum-based tokens (via ICOs or exchanges), crypto-collectibles, in-game items, and other non-fungible tokens (NFTs) earned as a reward for completing bounties (Gitcoin, Bounties Network). Furthermore, in Ethereum 2.0 (Serenity), users will be able to become a validator and help secure the network by providing computational resources and locking up 32 Ether per validator. Due to this, it is expected that Proof of Stake will lock a substantial amount of the circulating supply of Ether. There are also discussions around introducing a ‘fee-burn’ model where a percentage of Ether used to pay transaction fees would be ‘burned’ and thus reduce the circulating supply of Ether.
In addition to utility value, Ether also has speculative value. This is value that is derived from speculative activities (such as trading and investing) which currently accounts for most of the value behind all crypto-assets. As observed in 2017, crypto-assets can attract substantial speculative interest, with some assets increasing in value by 1000x over just a few months. This speculative interest often brings fresh capital into the ecosystem that can be reinvested into various verticals, but it can be damaging to the short-term market sentiment of all crypto-assets.
Can’t tokens on Ethereum be used instead of Ether?
Theoretically, yes. Practically, no. The concept of using another asset to secure the Ethereum network is called ‘economic abstraction’ (a good primer can be found here. This would involve miners / validators accepting tokens other than Ether in exchange for adding valid transactions to new blocks.
It is highly unlikely that the Ethereum protocol will ever implement economic abstraction as it could potentially reduce the security of the blockchain by compromising the value of Ether.
How does valuable Ether help to secure the network?
In Proof of Work systems, miners compete with each other to find a block and thus be rewarded for their work (in the form of the native crypto-asset of the protocol). As the price of the asset increases, it naturally brings with it more miners, which then increases the network difficulty. As the network difficulty increases, it becomes increasingly difficult for miners to find a block which results in large scale mining operations (commonly referred to as “mining farms”) being one of the only profitable ways to mine on a Proof of Work network (once it reaches a certain size). Miners can also join ‘mining pools’ in order to increase their chances of finding a block and thus increase their rewards.
It would currently cost an individual or group a large amount of money to successfully attack or take control of either the Bitcoin or Ethereum PoW blockchains
When Ethereum transitions to Proof of stake under Ethereum 2.0, it is expected that users will be able to stake 32 Ether per validator and receive rewards for their work in the form of additional Ether (at a dynamic issuance rate , discussed later in this essay).
Under Proof of Stake, the cost of attacking Ethereum will be tied to the cost of Ether. Instead of using energy intensive mining (as it is under Proof of Work), validators will “stake” Ether, and will lose part or all of their stake if they attempt to behave fraudulently. The more validators with staked Ether securing the network, the more Ether an attacker would need to purchase in order to carry out an attack. Such an attack would likely rapidly increase the price of Ether and thus make it prohibitively more expensive for the attacker.
Medium of Exchange
In order for something to function as money within an economy, it needs to act as a good medium of exchange (MoE), unit of account (UoA) and store of value (SoV). Ether is used as a medium of exchange within the Ethereum economy for a wide range of apps, with dApp providers accepting it in exchange for fungible / non-fungible tokens, or other services. It is also used as a unit of account by various parties (including companies that have raised Ether via ICOs). Finally, Ether has historically been used as a store of value, with investors and speculators purchasing Ether to hold for investment purposes, given its relative scarcity, predictable supply growth, and inherent utility.
An object (physical or digital) must typically exhibit five distinct attributes in order to be considered as money: portability, durability, divisibility, fungibility and established history (see the Lindy effect). Ether is highly portable (because it’s digital), durable (again, because it’s digital), divisible (up to 18 decimal places), but has limited fungibility as ETH tokens are interchangeable with one another, but accounts/addresses can be blacklisted quite easily. Privacy protocols such as zk-SNARKs will eventually improve this property for Ethereum.
Ethereum has been in operation since 2015 and continues to build a strong established history. The Ethereum network (and Ether) have functioned as expected for 99.99% of its life. The other 0.01% includes surviving The DAO, multiple large hacks of smart contracts, multiple protocol-level exploits, the Shanghai DoS attacks, constant negative remarks from the wider crypto community and multiple bear markets (including a recent 94% drop in price).
On top of this, Ether has additional properties such as being censorship-resistant, permission-less, pseudonymous and interoperable with other crypto-networks.
The supply scheme of crypto-assets is hotly debated among various parties (especially those in the Bitcoin community) and there are currently two main approaches: a capped supply (like Bitcoin) or a low, predictable and hard to change issuance rate (like what is planned for Ethereum 2.0).
In Ethereum 2.0 (with Sharding and Proof of Stake implemented), while a low inflation rate will always guarantee the validators are rewarded for securing the network, it suffers from the fact that it may dilute the value of Ether for those that are not validators. Though, this is offset by Ether being taken out of the circulating supply through staking, various open finance applications, fee burning, and people simply losing access to their Ether.
The difficulty is periodically adjusted to keep the block time around a target time.pos ethereum bitcoin wm bank bitcoin bitcoin аналоги займ bitcoin bitcoin окупаемость bitcoin rotator
bitcoin xpub
ethereum claymore bitcoin 4000
bitcoin local cryptocurrency capitalisation ротатор bitcoin bitcoin foto ethereum рост cryptonight monero bitcoin коды all cryptocurrency
trezor bitcoin прогноз bitcoin block ethereum ubuntu bitcoin bitcoin анимация карты bitcoin monero blockchain swiss bitcoin ethereum метрополис bitcoin explorer bitcoin приложения bitcoin casascius
пул ethereum monero dwarfpool bitcoin карты bitcoin drip monero gpu all bitcoin average bitcoin карты bitcoin bitcoin ставки geth ethereum tether майнить робот bitcoin bitcoin рубль bitcoin надежность торговать bitcoin
bitcoin заработок torrent bitcoin
poloniex monero cryptocurrency calculator статистика ethereum
партнерка bitcoin bitcoin people bitcoin film tera bitcoin отследить bitcoin bitcoin биткоин шахта bitcoin обменять bitcoin bitcoin tm рост bitcoin best cryptocurrency microsoft ethereum
ethereum miners bitcoin переводчик ethereum ann fpga ethereum эмиссия ethereum ethereum майнить bitcoin eth bitcoin timer monero обмен bitcoin india bitcoin википедия bitcoin mixer платформы ethereum bitcoin torrent bitcoin прогнозы зарабатывать bitcoin bitcoin tools прогноз ethereum planet bitcoin порт bitcoin bitcoin трейдинг исходники bitcoin calculator ethereum clame bitcoin monero hardware ethereum homestead
bitcoin greenaddress aliexpress bitcoin loan bitcoin обсуждение bitcoin monero faucet
fake bitcoin bitcoin книга bitcoin обменник casascius bitcoin bitcoin node bitcoin игры bitcoin usb bitcoin shop 0 bitcoin xpub bitcoin bitcoin space bitcoin ферма bitcoin banks проблемы bitcoin bitcoin capital hack bitcoin ico cryptocurrency
bitcoin оплатить polkadot ico bitcoin карта bitcoin комиссия bitcoin code заработок ethereum кошелек bitcoin портал bitcoin bitcoin вложить bitcoin coinmarketcap bitcoin monkey bitcoin ruble email bitcoin monero майнер bitcoin loto bitcoin plus bitcoin приложения tether верификация coinbase ethereum bitcoin online
bitcoin брокеры bitcoin x2 lurk bitcoin pokerstars bitcoin
go ethereum bitcoin conveyor bitcoin будущее free bitcoin bitcoin token bitcoin код invest bitcoin pay bitcoin bitcoin расчет bitcoin 999 bitcoin sec bitcoin расширение bitcoin
ethereum прогнозы bitcoin конвертер bitcoin fpga токены ethereum bitcoin calculator bitcoin etherium обменник ethereum ethereum пулы statistics bitcoin plasma ethereum ethereum аналитика cryptocurrency calendar usb bitcoin monero mining click bitcoin monero spelunker bitcoin транзакция bitcoin stock bitcoin майнить почему bitcoin bitcoin мастернода
by bitcoin bitcoin стоимость future bitcoin ethereum доллар bitcoin расшифровка blocks bitcoin flappy bitcoin сервисы bitcoin dat bitcoin bitcoin ru bitcoin donate bitcoin metatrader bitcoin fpga биржа monero
вложения bitcoin bitcoin котировка курс ethereum Theft and exchange shutdownsплатформ ethereum dance bitcoin takara bitcoin биржа monero bitcoin продать
взлом bitcoin ethereum упал котировки ethereum bitcoin froggy ethereum статистика forecast bitcoin ethereum пулы bitcoin биткоин click bitcoin truffle ethereum bitcoin elena monero address bitcoin компьютер cryptocurrency wallet
bitcoin компьютер bitcoin bubble bitcoin loan With so many complexities, layers, and intermediaries, wouldn’t it be better if our money communications could be one-to-one, or, in tech terms, peer-to-peer? History shows that we want to communicate simply and directly. But our legacy of currency and financial systems are the exact opposite: convoluted and indirect.будущее bitcoin bitcoin timer адреса bitcoin bitcoin кран locals bitcoin
bitcoin blog miner bitcoin litecoin bitcoin ethereum асик wikipedia cryptocurrency bitcoin safe vpn bitcoin bitcoin бонусы bitcoin bio bitcoin co ethereum os индекс bitcoin lavkalavka bitcoin ethereum пулы bitcoin reward ico monero putin bitcoin bitcoin png bitcoin node tether usb bitcoin golden ethereum регистрация bitcoin conf master bitcoin future bitcoin monero btc
mini bitcoin
bitcoin сайты
кошельки bitcoin
надежность bitcoin ecopayz bitcoin bitcoin gpu
bitcoin 10 monero faucet прогноз bitcoin bestchange bitcoin bitcoin bit wild bitcoin
форум bitcoin bitcoin payza monero кран
ethereum russia create bitcoin bitcoin roll халява bitcoin bitcoin daemon bitcoin kran windows bitcoin bitcoin телефон
bitcoin payoneer казино ethereum bitcoin tor secp256k1 ethereum bitcoin rt презентация bitcoin ethereum miner
bitcoin server monero криптовалюта blogspot bitcoin bitcoin x2 king bitcoin пузырь bitcoin обменники bitcoin бот bitcoin 22 bitcoin bitcoin видеокарты bitcoin страна mac bitcoin bitcoin invest bitcoin софт
genesis bitcoin bitcoin перспективы спекуляция bitcoin обменники bitcoin bitcoin okpay 600 bitcoin bitcoin ledger bitcoin history short bitcoin bitcoin математика
forbot bitcoin tether майнинг купить bitcoin bitcoin генератор bitcoin cran bubble bitcoin bitcoin ruble рейтинг bitcoin monero nicehash trezor bitcoin cz bitcoin ethereum алгоритм bitcoin настройка bitcoin onecoin abi ethereum ethereum crane bloomberg bitcoin On 25 March 2014, the United States Internal Revenue Service (IRS) ruled that bitcoin will be treated as property for tax purposes. This means bitcoin will be subject to capital gains tax. In a paper published by researchers from Oxford and Warwick, it was shown that bitcoin has some characteristics more like the precious metals market than traditional currencies, hence in agreement with the IRS decision even if based on different reasons.weekend bitcoin cryptocurrency bitcoin миллионеры micro bitcoin bitcoin atm bitcoin fpga bitcoin 2017 film bitcoin monero logo
bitcoin кошелька
ethereum course компиляция bitcoin платформе ethereum ethereum rig mist ethereum bitcoin blog
bitcoin journal japan bitcoin bitcoin work bitcoin окупаемость крах bitcoin bitcoin кликер bitcoin legal bitcoin passphrase bitcoin express футболка bitcoin bitcoin даром продать monero accepts bitcoin bitcoin asic bitcoin обозреватель doge bitcoin ethereum описание bitcoin зебра eos cryptocurrency bitcoin run bitcoin scripting россия bitcoin Image by Sabrina Jiang © Investopedia 2021блок bitcoin bitcoin stiller china bitcoin bitcoin club monero calculator bitcoin 2 ethereum проблемы ethereum dao ethereum stats ethereum shares bitcoin оборот india bitcoin bitcoin circle clame bitcoin bitcoin statistics bitcoin аналитика
удвоить bitcoin bitcoin client monero fork nova bitcoin bitcoin 4000 bitcoin laundering
(another core function of money). Although paper notes were initially linked to precious metals,hack bitcoin bitcoin vizit What this means is that even if cryptocurrencies become popular in usage, they could become so heavily diluted by the sheer number of cryptocurrencies that any given cryptocurrency only has a tiny market share, and thus not much value per unit. That makes it challenging to determine a realistic Bitcoin value, or a value of other cryptocurrencies.торговать bitcoin short bitcoin bitcoin dance bitcoin платформа tor bitcoin 1 monero bitcoin ann кликер bitcoin antminer ethereum курсы bitcoin plus bitcoin bitcoin background bitcoin магазин mini bitcoin пулы ethereum разделение ethereum пополнить bitcoin mineable cryptocurrency bitcoin stellar bitcoin markets bitcoin mmgp pull bitcoin bitcoin click bitcoin cache количество bitcoin
chain bitcoin
bitcoin шахты ethereum erc20 solo bitcoin часы bitcoin bitcoin футболка
monero amd bitcoin вики bitcointalk bitcoin
алгоритм bitcoin strategy bitcoin bitcoin отзывы config bitcoin символ bitcoin monero пул
bitcoin wmx pplns monero bootstrap tether bitcoin парад bitcoin club
технология bitcoin cryptocurrency market bitcoin click bitcoin mail bitcoin криптовалюта electrum bitcoin валюта bitcoin bitcoin express takara bitcoin connect bitcoin polkadot bitcoin gold hd7850 monero the ethereum cryptocurrency dash book bitcoin bitcoin segwit bitcoin spinner bitcoin фото bitcoin prominer monero fee сложность ethereum bitcoin сайты китай bitcoin nonce bitcoin Contrary to popular belief, bitcoin is in fact backed by something. It is backed by the only thing that backs any form of money: the credibility of its monetary properties. Money is not a collective hallucination nor merely a belief system. Over the course of history, various mediums have emerged as money, and each time, it has not just been by coincidence. Goods that emerge as money possess unique properties that differentiate them from other market goods. While The Bitcoin Standard provides a more full discussion, monetary goods possess unique properties that make them particularly useful as a means of exchange; these properties include scarcity, durability, divisibility, fungibility and portability, among others. With each emergent money, inherent properties of one medium improve upon and obsolete the monetary properties inherent in a pre-existing form of money, and every time a good has monetized, another has demonetized. Essentially, the relative strengths of one monetary medium out-compete that of another, and bitcoin is no different. It represents a technological advancement in the global competition for money; it is the superior successor to gold and the fiat money systems that leveraged gold’s monetary properties.ethereum mine халява bitcoin bitcoin co bitcoin count bitcoin stealer monero ann eobot bitcoin ethereum markets динамика ethereum bitcoin fpga символ bitcoin buy tether bitcoin бонус forecast bitcoin ropsten ethereum bitcoin nedir ethereum прибыльность обмен tether
r bitcoin ethereum контракт bitcoin bbc иконка bitcoin форк bitcoin bitcoin описание bitcoin anonymous ethereum доходность
dwarfpool monero all bitcoin bitcoin магазин xmr monero кран bitcoin What’s the Incentive?multiply bitcoin bitcoin kran протокол bitcoin bitcoin стратегия nxt cryptocurrency разработчик bitcoin purse bitcoin cryptocurrency bitcoin cryptocurrency bitcoin widget One of the main goals of the founders of Ethereum, the platform that supports the world’s second-largest cryptocurrency, is to make these kinds of apps easier to create. There are many challenges in trying to reach this goal.Miners, developers or some other entity could change Bitcoin's properties to benefit themselvesbitcoin 20 bitcoin пожертвование bitcoin phoenix кошель bitcoin калькулятор ethereum bitcoin майнеры
qtminer ethereum tera bitcoin ethereum vk bitcoin payeer bitcoin io monero майнить bitcoin index знак bitcoin bitcoin atm
майнить monero nubits cryptocurrency bitcoin msigna blake bitcoin bitcoin эмиссия bitcoin matrix laundering bitcoin bitcoin nodes ninjatrader bitcoin bitcoin count bitcoin prominer click bitcoin
bitcoin 50 заработок bitcoin forex bitcoin steam bitcoin ethereum получить ethereum testnet Although Bitcoin is empirically one of the best investments of the past decade, it still remainscryptocurrency gold yota tether fpga ethereum отзыв bitcoin monero blockchain bitcoin loans bitcoin pizza
приложения bitcoin
play bitcoin p2pool monero
ethereum api биржа bitcoin bitcoin курс tcc bitcoin ethereum падение bitcoin автосерфинг
lamborghini bitcoin bitcoin spend monero miner blake bitcoin ethereum homestead ethereum форк bitcoin vizit bitcointalk ethereum биржа monero ethereum price настройка bitcoin bitcoin online bitcoin doubler bitcoin 20 monero simplewallet токены ethereum bitcoin spend polkadot stingray tether js bitcoin 999 bitcoin facebook bitcoin википедия stock bitcoin bitcoin prices bitcoin location bitcoin tor bitcoin hardfork ethereum course cryptocurrency index decred ethereum bitcoin сбор sec bitcoin обменник monero monero обмен bitcoin вебмани bitcoin money neo cryptocurrency сбербанк bitcoin bitcoin forums bitcoin pdf bitcoin banks
bitcoin конверт bitcoin расшифровка
ethereum прогнозы приват24 bitcoin tether 4pda