What is Ethereum?

Learn about Ethereum, the second most popular cryptocurrency by market capitalization.

Bakkt
Apr 14 2022

It's nearly impossible to become an expert on all of the 8,000+ cryptocurrencies1 out there, but there are at least a few that any crypto investor—even one who is a beginner—should know about. Ether, also sometimes known as Ethereum, is one of them.

Ready to take your crypto knowledge beyond the basics? Learn about Ethereum, the second most popular cryptocurrency by market capitalization.2

Ethereum is often misunderstood as a simple substitute for bitcoin. However, it's a bit more complicated than that. Ethereum is more than just a cryptocurrency—it's an entire network or platform that programmers can use to develop and launch decentralized applications, or DApps. The Ethereum network can also be used to create what are known as "smart contracts," which are useful for their secure, automated execution of terms.

So, what does a platform for app developers have do with cryptocurrency? Inside the Ethereum platform, everything must be bought and paid for using a digital currency called ether. Any time you transact in the Ethereum network, you're transacting in ether.

And, last but not least, Ethereum is the network that powers many of those non-fungible tokens (NFTs) you've been hearing so much about, from supermodel Emily Ratajkowski's $170,000 photograph3 to former Twitter CEO Jack Dorsey's $2.9 million first tweet.4

Why do I hear so much about it?

As you learned above, the Ethereum network—and its associated cryptocurrency, ether—offers many interesting use cases for tech-savvy programmers. In turn, that creates high demand for the ether cryptocurrency, not only from the programmers themselves, but also from those who believe that ether's useful applications make it a desirable investment with the potential to increase in value over time.

Offering a different value proposition than bitcoin and other cryptocurrencies, ether has made a lot of headway among crypto investors. On ether's debut day in 2014, it cost $0.31 cents per token.5 In late 2021, it reached an all-time high of over $4,800 per token.6 As mentioned above, it's the second most popular cryptocurrency by market capitalization, behind only crypto darling bitcoin.

What's so great about it?

Simply put, it's practical. Ether currency is a key part of the Ethereum network and all of its exciting possibilities. Buying ether isn't just a vote of confidence in the currency, but a vote of confidence in the network and everything that people can use it for.

With innovation in its early stages and people continuing to search for new applications for Ethereum—and its underlying blockchain technology—bullish investors are betting that there's room to grow.

What's can I spend it on?

You can use ether to make purchases on the Ethereum network, send it to others, or use a crypto credit card or debit card that is set up to allow retail purchases using ether.

Or you can just hold it as an investment. It's up to you!

This does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell, or otherwise transact in any investment, including any of the product(s) mentioned herein, or an invitation, offer or solicitation to engage in any investment activity. This information is provided solely on the basis that you will make your own investment decisions, and Bakkt does not take account of any investor's investment objectives, particular needs, or financial situation. It is strongly recommended that you seek professional investment advice before making any investment decision.

1S&P Dow Jones Indices. "S&P Cryptocurrency Indices." Accessed March, 2022.

2Coindesk. "Ethereum." Accessed March, 2022.

3Los Angeles Times. "This Picture of Emily Ratajkowski Is Free To Look At. But Its NFT Sold for $140,000." Accessed March, 2022.

4CNBC. "Twitter CEO Jack Dorsey's First Tweet NFT Sells For $2.9 Million." Accessed March, 2022.

5The Motley Fool. "If You Invested $100 in Ethereum on Its First Day, Here's How Much You'd Have Now." Accessed March, 2022.

6Time. "Ethereum Continues to Hover Around $3,000. See How That Compares to Its Price History." Accessed March, 2022.