What is Ethereum? (Ultimate Guide for Beginners)
Humphrey Yang Humphrey Yang
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 Published On Apr 15, 2021

What is Ethereum (ETH)? Explained easily for Beginners. In this video I also discuss the major differences between Bitcoin and Ethereum, as well as considerations before investing into Ethereum.

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To understand Ethereum, let's first discuss what it is not - which is Bitcoin. If you've been watching my channel, you should know that I have some beginner videos on Bitcoin,

In short, Bitcoin is a decentralized currency that runs on a block-chain network. This technology allows transactions to happen in a transparent manner. When a transaction is made on the block-chain, pretend that it is telegraphed out to the entire network, and then everyone on the network acknowledges it took place.

It's decentralized in that, you don't need a bank or financial institution for it to happen or be logged.

Bitcoin has been compared to traditional currency, as a store of value, and when people think of a digital currency in which you can buy and sell goods - they think of Bitcoin.

So that network is called Ethereum, and the basis of it is to execute Smart Contracts. So what are Smart Contracts?

Let's start with the concept of decentralization. Right now the internet is centralized - which means that if you want to do anything on the internet, you have to go through a 3rd party.

On Ethereum, programmers are creating the method in which smart contracts get executed with apps.

As long as the conditions are met, then the smart contract will automatically take place and be transparent on the network.

So in our Uber example, a smart contract could handle the payments for Uber, thereby making the transaction more efficient.

In our Uber example, Uber needs to take money from the rider, process it on the backend, then give it to the driver - accounting for processor fees. With Ethereum, this process could be automated, more efficient, and way cheaper.

This is really important:

The Ethereum network uses "Ether" to make its transactions possible.

"Ether" is used as a medium of exchange, and is thus treated like a currency for its utility of helping Ethereum network transactions run.

So when we're referring to Ethereum as a cryptocurrency, we're referring to the "Ether" coin, and these days it's trading at well over $2k a coin.

If someone tells you that they have invested in Ethereum, it implies that they have purchased Ether.

Key Differences between BTC and ETH:
1. Supply - BTC is finite (21 Million BTC ever created), ETH is currently infinite.
2. Transaction Speed - ETH is way faster
3. Value of ETH - lies in the network, not the currency

How should we view it as an investment?
1. Ethereum is the most used blockchain right now, people use it for a lot of different purposes like I talked about earlier, but the fact that it works today means that it has some utility and value there - compare that to Dogecoin, what do you use Dogecoin for other than to look at it?

2. There is some network risk.

3. Subject to regulation.

4. Personally I am not putting all my eggs in one basket.


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