Although commonly associated with Bitcoin, blockchain technology has many other applications that go way beyond digital currencies. In fact, currency is only one of several hundred applications that use blockchain technology today.
Like Bitcoin, Ethereum is a distributed public blockchain network. At its simplest, Ethereum, like Bitcoin, is another open software platform based on blockchain technology, but instead of just working as currency, Ethereum enables developers to build and deploy other decentralized applications.
Firstly, with regard to cryptocurrencies, in the Ethereum blockchain, instead of mining for Bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Buterin had argued that Bitcoin needed a scripting language for application development. Failing to gain agreement, he proposed the development of a new platform with a more general scripting language. Development was funded by an online crowdsale that took place between July and August 2014. The system went live on 30 July 2015, with 11.9 million coins “premined” for the crowdsale. This accounts for about 13% of the total circulating supply. In 2016, as a result of the collapse of The DAO project, Ethereum was split into two separate blockchains – the new separate version became Ethereum (ETH), and the original continued as Ethereum Classic (ETC). The value of the Ethereum currency grew over 13,000% in 2017.
While the Bitcoin blockchain is used to track ownership of digital currency (Bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application. It uses smart contracts, computer protocols intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract, to enable thousands of applications to run on the blockchain.