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What is Ethereum?

Ether is a digital currency used for operating smart contracts on the Ethereum network. Like Bitcoin, the Ethereum network and Ether tokens are not controlled or issued by any bank or government - instead it is an open network which is managed by its users.

Is Ethereum safe?

Ethereum has been deployed in different phases. Currently the Ethereum project is in the 2nd phase, called “Homestead”. The 4 planned phases for the growth of the Ethereum network are, in order: Frontier, Homestead, Metropolis, and Serenity. Ethereum Homestead clients are working smoothly after being in beta for several months without any major incidents. However, Ethereum is still an experimental technology. Since it allows for programs to run on a virtual machine, it’s still possible that some things may still go wrong, such as poorly written smart contracts that contain bugs.

Why would I use Ethereum?

While Bitcoin allows you take part in a global financial network, using Ethereum you can participate in a global computational network. This is done by means of smart contracts, which are scripts of code that can be deployed in the Ethereum blockchain. Although smart contracts are still a very new technology, they have a wide range of potential applications in many different areas, such as voting, global supply chains, medical records, the financial system, and possibly others that have yet to be discovered.

Is it tied to the value of the dollar?

The value of Ethereum is not tied or pegged to the value of any other currency. Similar to stocks or property, Ethereum's value is determined by buying and selling in the open market. The price of Ethereum changes in real time based on the number of people who want to buy or sell it at a given moment.

Why does it change value?

Ethereum is traded for bitcoin, dollars, euros, yen, and other currencies in real time 24 hours a day. Depending on the demand for buying or selling Ethereum, the price can fluctuate from day to day. This is similar to the manner in which the value of a stock or property can go up or down based on supply and demand. Ethereum value can be volatile compared to currencies such as the US dollar because it is still an emerging technology, with a relatively small pool of liquidity.

Is it similar to a credit card or paypal?

Ethereum operates in a similar way to the Bitcoin network, in that it allows users to send and receive tokens that represent value over an open network. However, the primary aim of Ethereum is not to act as a form of money, but to operate smart contracts.