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Ether (ETH), the native cryptocurrency of the Ethereum network, is the second most popular digital token after bitcoin (BTC). As the second-largest cryptocurrency by market capitalization (market cap), comparisons between the two are natural.

Ether and bitcoin are similar in many ways: Each is a digital currency traded via online exchanges and stored in various types of cryptocurrency wallets. However, there are many significant differences. Bitcoin is designed to provide an alternative to physical or fiat currency; Ethereum is intended for complex smart contracts and decentralized  applications, which are believed to be part of the emerging (and theoretical) infrastructure of the future of the internet known as Web3.

Bitcoin was launched in January 2009. It introduced a novel idea set out in a white paper by the mysterious Satoshi Nakamoto. It introduced Bitcoin as an online currency without any central authority, unlike government-issued currencies. There are no physical coins, only transactions recorded on a cryptographically secured public ledger.

Although Bitcoin was not the first attempt at an online currency of this type, it was the most successful. As a result, it has become known as the predecessor to virtually all cryptocurrencies that have emerged since.

Over the years, the virtual, decentralized currency concept has gained acceptance among regulators and government bodies. Although only formally recognized as a medium of payment or store of value in a few countries, Bitcoin has managed to carve out a niche for itself and continues to co-exist with the financial system despite being regularly scrutinized and debated.

Blockchain technology is being used to create applications that go beyond just enabling a digital currency. Launched in July 2015, Ethereum is the largest and most well-established open-ended decentralized software platform.

Ethereum enables developers to build and deploy smart contracts and decentralized applications (dApps) without downtime, fraud, control, or interference from a third party. To accomplish this, Ethereum comes complete with its own programming language that runs on a blockchain.

The potential applications of the Ethereum virtual machine are wide-ranging using its native cryptographic token, ether (ETH). In fact, Ethereum is being developed to decentralize the Web. How we interact with the Web will not likely change much, but how it operates in the background is being worked on to remove centralized entities using applications developed on Ethereum and blockchains like it.

Ether generally has four purposes: It is traded as a digital currency on exchanges, held as an investment, used to purchase goods and services, and used on the Ethereum network to pay transaction fees.