What is Ether? What is the difference between Ether and Ethereum?

Ether (ETH) is the native cryptocurrency of Ethereum, a decentralized, open-source blockchain platform that enables smart contracts and decentralized applications (DApps). To operate, Ethereum requires computational resources, networking infrastructure, and energy, which are compensated through ETH payments.

Users pay transaction fees (called "gas" fees) in ETH to execute transactions and smart contracts, incentivizing validators to secure the network.

While ETH is the foundational currency of Ethereum, the platform also supports a diverse ecosystem of other tokens, which developers can create for various use cases. These tokens coexist within Ethereum’s broader cryptocurrency network, though ETH remains its core asset, essential for fueling transactions and operations.

 

How to store Ether?

Ether can be stored in three primary ways:

  1. Storing directly on a cryptocurrency exchange
    For beginners, keeping Ether on a reputable cryptocurrency exchange offers the simplest solution, providing easy access for trading. However, this convenience comes with risks—exchanges may be vulnerable to hacking or bankruptcy, potentially leading to loss of funds. The actual risk level depends on the exchange’s regulatory compliance, security protocols, and user protection measures.

  2. Hot wallet
    A hot wallet is a software-based cryptocurrency wallet that remains connected to the internet, such as desktop, mobile, or web-based wallets. Its primary advantage is convenience, allowing users to easily send, receive, and trade Bitcoin at any time. However, because hot wallets generate, store, and use private keys online, they are more vulnerable to hacking, phishing, and other cyber threats compared to offline storage methods. 

  3. Cold wallet
    A cold wallet stores cryptocurrency private keys on offline devices—such as hardware wallets (e.g., USB devices) or even paper wallets, where keys are handwritten or printed. Since the private keys remain completely disconnected from the internet, cold wallets eliminate the risk of hacking and cyberattacks. However, this enhanced security comes with trade-offs: transferring assets is less convenient, and losing the physical device or paper backup may result in permanent loss of access to the funds.

 

Comparing Bitcoin and Ether

 

Bitcoin, BTC

Ether, ETH

Creation time

2009

2015 (Ethereum platform launch)

Key use

Digital currency, store of value and peer-to-peer Payments

Payment of Ethereum network transaction and smart contract execution fees.

Total supply cap

21 million tokens, with a fixed and unchangeable supply.

No fixed cap; supply fluctuates.

Technical foundation
  • Blockchain, Proof of Work (PoW)
  • Halving every 4 years
  • Blockchain, now transitioned to Proof of Stake (PoS)
  • Supply regulated through a burning mechanism

Supply trend

Gradually stabilizing, particularly as increased long-term holdings reduce circulating supply

Supply is more flexible due to staking and burning mechanism

Smart contract

Unsupported

Supported, allowing automatic execution of contract terms.

Ecosystems

Mainly as a currency and value storage

Support for decentralized applications (DApps), DeFi, NFTs, etc.

Market Position

The largest cryptocurrency by market capitalization

The second-largest cryptocurrency by market capitalization

 

Disclaimers

Investment involves risk, including possible loss of principal. Past performance does not represent future performance. The information contained herein is for informational purposes only and does not constitute an offer or invitation to anyone to invest in any funds and has not been prepared in connection with any such offer. The material has been prepared and issued by MicroBit Capital Management Limited. This material has not been reviewed by the Securities and Futures Commission.