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Ethereum and Ether, the Cryptocurrency of Developers

While and since Bitcoin got main stream an incredible number of cryptocurrencies have entered the scene. It is not a complex thing to start one, you need small applications that can be downloaded and run on a pc to create a network, then in that network you run your crypto block chain algorithm.

Crypto currencies have no central issuer, and hence there needs to be a mechanism to bring them into circulation. This is done through so called ‘proof of work’ which is a method of approximately equalizing all people wanting to own the currency. By investing electricity and hardware into making random guesses for a lottery number all people trying are equal and the ‘winner’ will rightfully own the new coins. It really works like that, Bitcoing mining is nothing more than guessing a long character string.

 

This ‘mining’ is a problem for the climate, it wastes enormous amounts of energy, but it is intrinsic in a truely decentralized ‘trust-less’ currency. Still the people with more calculating power can dominate what counts as a valid transaction, and cuts in the network (f.i. a cut between Europe and Africa) can cause a split in the block chain, in theory Bitcoins could be spend twice.

One of the more recent currencies is Ether. Ether seems to be designed right. It is not so much a community fiat currency, like Bitcoin, where users of all kind can use the coin or not. This type of unenforced use eventually runs into trouble. If you have to pay taxes but can’t in Bitcoin you have a problem, and if some new coin is launched that provides a better guarantee to be valuable Bitcoin will be sold off for that coin. The luck of Bitcoin is that it has been traded back and forth between USD and EU so often that people can use it as a proxy Dollar or Euro, which of course is not what any cryptocurrency is about.  Ether corrects this.

 

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