What’s the difference between Ethereum and ether?
Ethereum and ether are two terms that are often confused. This isn’t that big of a problem, however, there’s definitely a difference between the two.
When we refer to Ethereum, we mean the entire network. In order to transfer value and to pay each other on the network, there needs to be a network token that represents a certain value. In addition, miners should be rewarded in some way for the work they do. The tokens that are used on the Ethereum network are called ethers.
Ether is the currency on the Ethereum network and is, therefore, an essential part of the network as a whole. Thus, when people mention they’ve purchased Ethereum, they’re actually referring to ether.
How does Ethereum work?
Just like Bitcoin, Ethereum is an open-source blockchain protocol. The source code of both projects is available for everyone to see and verify. The workings of Ethereum’s protocol are largely identical to those of Bitcoin.
Another resemblance with Bitcoin is that the Ethereum network consists of nodes that all have a copy of the entire ether transaction history. Both blockchains are entirely open, meaning that anyone can continue to build on the protocol and launch applications on it.
Both Bitcoin and Ethereum utilize proof of work consensus algorithm. However, in the long term, Ethereum plans to switch to a proof of stake algorithm, which should cost a lot less energy.
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