Ether is a cryptocurrency based on Ethereum’s blockchain. In addition to Bitcoin and Litecoin, it is one of the more well-known of the cryptocurrencies and it is traded on several market places online.

Ethereum is a blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. It is public and open-source, and it supports a modified version of Nakamoto consensus via transaction-based state transitions.


As with other blockchain-based currencies, the validity of each ether is provided by a blockchain containing a growing list of records (blocks) that are linked and secured using cryptography. The Ether ledger is an open, distributed one.

Unlike Bitcoin, Ethereum does not rely upon unspent transaction outputs (UTXOs). Instead, Ethereum operates using accounts and balances in a manner called state transitions. State is not stored on the blockchain; it is stored in a Merkle Patricia tree that is separate from the blockchain. State denotes the current balances of all accounts.

In 2018, it was decided that Ethereum would switch from its pure Proof-of-Work scheme to a hybrid scheme incorporating both Proof-of-Work and Proof-of-Stake.


New ether is produce through ether mining, a process similar to bitcoin mining.

Data from the year 2017 show that in that year, roughly 9.2 million new ether were created through mining, which increased the total ether supply by 10%.

There is no hard cap on the total supply of ether. In June 2018, the total supply reached 100 million ether.

Good to know about Ether

Symbol Ξ


(this is the Greek uppercase Xi character)

Abbreviation ETH
Units 1 Ether

1 Gwei is 10−9 Ether

1 Wei is 10−18 Ether

Timestamped scheme Proof-of-Work Ethash
Hash function Keccak
Issuance Block and Uncle/Ommer reward
Block reward 3 ETH (non-deterministic)
Block time 14-15 seconds on average

The unit Wei is named in honor of cryptocurrency pioneer Wei Dai.


The Proof-of-Work function for Ether and other Ethereum-based blockchain currencies is called ethash. Ethash relies on the hash function Keccak.

Ether and Bitcoin – differences and similarities

At the time of writing, Bitcoin is the most well-known cryptocurrency and also the one with the largest market capitalization. For those of you who are familiar with Bitcoin but not with Ether, we have compiled a list of some differences and similarities between the two cryptocurrencies.

Blocktime Bitcoin: 10 minutes

Ether: 14-15 seconds

Mining Bitcoin: The mining rate halves every 4 years

Ether: Mining rate typically consistent, occasionally changing during hard forks

Proof-of-Work Bitcoin: Mining uses the NSA-designed SHA-256 as Proof of work algorithm.

Ether: Mining uses the Ethash algorithm, which makes specialized ASICs less advantageous for miners.

Account system Bitcoin: The UTXO system


Ether: Values in wei are debited from accounts and credited to another.

Transaction fee Bitcoin: Transactions compete by means of transaction size (in byte). Bitcoin transactions typically have fees specified in satoshis per byte.


Ether: Transaction fees differ by computational complexity, use of bandwith and storage space. The system is known as gas. Each gas unit have a price and that price is usually specified in gwei. Generally speaking, ether have lower transaction fees than bitcoin.


What is the EVM?

The Ethereum Virtual Machine (EVM) is a decentralized Turing-complete virtual machine capable of executing scripts using an international network of public nodes.


Gas is an internal transaction pricing mechanism used by Ethereum to allocate resources on the network. One of its jobs is to discourage spam.

What’s Ethereum Classic (ETC)?

In June 2016, someone exploited a flaw in the DAO project’s smart contract software to siphon off one-third of the money in the DAO fund to a subsidiary account and get away with $50 million worth of Ether.

As a result, the Ethereum community took the controversial decision to hard-fork the Ethereum blockchain to restore virtually all funds to the original contract. This hard-forking was carried out on 20 July 2016 at 01:20:40 PM +UTC at Block 1920000.

The original un-forked blockchain is maintained as Ethereum Classic. The new forked version, where the theft was reversed, is the one we today call Ethereum (ETH).