What is Ethereum?

Ethereum is a programmable blockchain. In essence, its a place developers can create apps and host them on.

Imagine the Ethereum network similarly apple store, where people can build and deploy theses applications.

These apps that developers create are called dapps, or de-centralized applications.

The app store comparison might be a little bit off, as one of the biggest differences between the two is that the Ethereum network does not have a central governing body to manage and oversee it. How can ethereum's blockchain based software application run if it is not controlled by a central entity?

What is Ether?

Ether is the Ethereum blockchain's native cryptocurrency. Although it fufills the basic functions of a cryptocurrency like being used as a currency or asset to trade with others, it is essential to the ethereum blockchain.

If Bitcoin can be compared to as 'digital gold', then Ethereum can be akin to 'digital oil'. Ether was designed with the intention to fuel to Ethereum network. Going back to the decentralized nature of cryptocurrency, ethereum's open source software is distributed across a vast network of computers around the world.

In order to incentivise people to host and maintain data on the ethereum network, Ether was created as a form of payment to fuel the ethereum network. The amount of ether required for network fees is determined by a built-in pricing system, also known as gas.

What is gas?

Gas considers the bandwith, space requirements, and computational difficulty of each transaction to calculate the amount of fees it will take to complete. The term gas was created to differentiate the network fees from the actual price of ether.

Originally, the concept of gas was introduced to compensate miners for their work done on maintaining and securing the blockchain. After the proof of stake algorithim was rolled out in 2022, gas fees became the reward for staking ETH.

When executing transactions on the network, we will see gas prices denoted in gwei, short for gigawei. Gigawei, also known as nanoether, which as the name implies is .000000001 or 10^-9 ETH.