Ethereum: What You Should Know Before You Invest

Ethereum is the second-largest cryptocurrency by volume, but its many uses can create a much larger learning curve for new investors than Bitcoin. Ethereum serves two purposes: One, it acts as money and can be a store of value,” says Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analytics platform. “But Ethereum is also like a highway for decentralized finance.”
Instead of creating value as a “digital gold” like Bitcoin, Ethereum is a software platform that runs on a blockchain. Users can interact with the platform using ether, the cryptocurrency associated with Ethereum — or buy and hold it as a store of value. Ethereum is commonly used by developers, but there are people who also invest in the crypto for its potential to be worth more over time. Ethereum was invented by programmer Vitalik Buterin in 2015, on the heels of Bitcoin.
“He realized that Bitcoin is like a pocket calculator, designed to do one thing, and it does it really well, but you can’t do anything else with it,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet.So Buterin created Ethereum, a blockchain network with an associated cryptocurrency called ether (ETH), with the potential to do far more.
Think of Ethereum like a smartphone, says Leech. Developers can build apps on smartphones, similarly to how they can build apps on Ethereum. While mobile phone apps have a more universal applicability these days, Ethereum apps are more geared toward crypto users. With the lending app example, a developer could create the app, which other crypto users can in turn use to lend and borrow.