What Is Ethereum and How Does It Work?

There’s tons of buzz about Bitcoin payment processing these days, but you’ve probably heard of Ethereum as well.

Last summer Aliant became one of the first payment processors to offer a Bitcoin solution to merchants. Now we’re excited to take it a step further and bring a new cryptocurrency processing platform that enables merchants to accept not only Bitcoin, but also Ethereum.

So What Is Ethereum?

Ethereum is a platform network and platform that uses a cryptocurrency called Ether. However, many people use the words interchangeably with the currency itself. Like Bitcoin and Litecoin, Ether is a cryptocurrency that you can use to buy or sell goods and services or even treat as an investment.

One notable merchant that currently accepts Ether payments is Overstock. In August 2017, the online retail giant partnered with ShapeShift to accept more than 60 cryptocurrencies as payment at its online stores.

How Does Ethereum Work?
Ether is generated by computers, known as miners. These miners connect to form a worldwide public network of computers, and miners are compensated with Ether for their contribution to the network. Mining was the only way you could initially acquire Ether; although, you can now buy or sell it on exchanges from others.

Every transaction is stored in a database known as a blockchain. You use a cryptocurrency wallet for exchanges, and your wallet verifies ownership by checking the blockchain. In this way, only the network is necessary to verify Ether unlike traditional currency, which requires a bank or government to back it.

How is Ethereum Different From Bitcoin?
Ether has been described as a cousin to Bitcoin. They’re both cryptocurrencies, and several exchanges and wallets deal with both. Ether also relies on the blockchain as a ledger that allows for accountability. However, you’re more likely to see Ether used as a currency on the network because the focus is on the platform and programming language that powers apps.

One feature of the network and apps on this platform is the Smart Contract. A Smart Contract enables you to specify payment to another user after certain conditions are met.

Ether has only existed since 2015 (Bitcoin originated in 2010), and Ether is currently worth only a fraction of the value of Bitcoin. But Ether and other cryptocurrencies experience similar drops and falls as Bitcoin.

If you’d like to be one of the first merchants in your industry to accept cryptocurrency payments, click here to learn more and talk to us today about getting started!