Unlike Bitcoin, which was released in 2009 by a mysterious creator known as Satoshi Nakamoto, Ethereum was created in a more transparent fashion by a 21-year-old Russian-Canadian, Vitalik Buterin, after he dropped out of Waterloo University in Ontario.
The most basic aim of Ethereum was to make it possible to program binding agreements into the blockchain, the smart contract concept. Two people, for instance, could program a bet on a sports game directly into the Ethereum blockchain. Once the final score came in from a mutually agreed upon source, the money would be automatically transferred to the winning party. Ether can be used as a currency in this system, but Ether are also necessary to pay for the network power needed to process the bet.
The Ethereum system has sometimes been described as a single shared computer that is run by the network of users and on which resources are parceled out and paid for by Ether.
Like Bitcoin, Ethereum has succeeded by attracting a dedicated network of followers who have helped support the software, partly in the hope that their Ether will increase in value if the system succeeds. Last week, there were 5,800 computers — or nodes — helping support the network around the world. The Bitcoin network had about 7,400 nodes.
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