What is Ethereum? Second largest cryptocurrency soars more than BILLION in a week
Unlike many of its rivals, including bitcoin and Ripple, Ethereum (ETH) surged over the past seven days.
After opening at £727 ($995) on January 6, Ether has stormed to about £935 ($1,280) today, according to CoinMarketCap.
Ethereum now boasts an eye-watering market capitalisation of nearly £90.6billion ($124billion), making it the second biggest digital currency on the market after bitcoin.
For those new to cryptocurrency, here is a handy introductory guide to Ethereum.
What is Ethereum?
Ethereum is an open software platform that, like bitcoin, is based on blockchain technology, enabling users to build decentralised applications.
Launched by Vitalik Buterin in 2015, Ethereum aims to allow users to make anonymous digital payments across international borders without the need of a traditional bank or third party.
Describing his digital currency, Mr Buterin said: “Ethereum is a platform that is specifically designed for people to build these kinds of decentralised applications, or DAPs for short.
“The Ethereum clients, which we are calling the Etherbrowser, will include peer-to-peer messaging and a generalised blockchain with a built in programming language, allowing people to use the blockchain for any kind of decentralised application.
“Ethereum can be used to build financial applications that are fully trustworthy and transparent because they run on the blockchain.”
A remarkable year for cryptocurrencies as a whole has seen Ether’s value jump from less than $10 this time last year to nearly $1,280 for a single token today.
Ethereum’s stunning rise prompted co-creator Steven Nerayoff to predict that a “flippening” could see Ether knock bitcoin off top spot in 2018.
Speaking to CNBC, he said: “What you’re seeing with Ethereum is exponential increase in the number of projects — there are billions of dollars being poured into the ecosystem right now — maybe 10 times more projects this year than last year, which could easily lead to a doubling, probably a tripling in price by the end of the year.”
But Mr Nerayoff added that bitcoin is likely to grow alongside Ethereum’s.
“The entire space is increasing,” he said. “There is huge interest by the public and there are more areas in which the public can invest, even in bitcoin, so you could just see an expansion in the entire space.”
Like bitcoin, Etherem can be “mined” but supplies are not infinite. Ether supplies are currently capped at 18 million, which is equivalent to about 25 percent of the initial supply.
Ethereum’s website explains: “The Ethereum network is kept running by computers all over the world.
“In order to reward the computational costs of both processing the contracts and securing the network, there is a reward that is given to the computer that was able to create the latest block on the chain.
“Every 15 seconds, on average, a new block is added to the blockchain with the latest transactions processed by the network and the computer that generated this block will be awarded three ether.”