The Ether/US Dollar pair is a crypto/fiat pair, much like bitcoin/USD. As such, you will probably only be able to trade it on a crypto exchange. The ETH/USD pair is not yet an “official” currency pair, in the sense that the EUR/USD is for instance. ETH is part of an emerging asset class which regulators haven’t yet firmly placed in the category of currencies.
As it is usually the case with cryptocurrencies, ETH is not easy to define. Released on July 30, 2015, Ethereum is much more than just a virtual currency. It is a distributed computing platform, as well as an operating system, based on an open-source, public blockchain. Ether is the native token of this ecosystem. It is in fact the entity marked ETH in the ETH/USD pair.
The Ethereum platform features smart contract functionality, which is one of its main “selling points”. Many newly launched crypto projects choose the Ethereum platform on account of this feature.
The Decentralized Virtual Machine is part of the smart contract environment. Scripts on the Ethereum network are executed by the DVM.
Although it is the second biggest cryptocurrency by market cap (after bitcoin) ETH has been launched in a manner quite reminiscent of the machinations of the ICO “era”.
Thought up by Vitalik Buterin, Joseph Lubin and Gavin Wood, ETH was funded by an online crowd sale, in the summer of 2014. Unlike bitcoin, ETH came online with some 72 million of its coins “pre-mined”. This pre-mined chunk of coins still accounts for more than 65% of the total circulating ETH supply, as of 2019.
Above and beyond the structure of the Ethereum network, ETH differs from its predecessor, bitcoin, in several ways.
There are more than 100 million ETH in circulation out there and there is no set cap on the amount of ETH that can be created. This obviously eliminates the scarcity factor from the ETH value equation.
ETH is therefore an inflationary cryptocurrency. Its current inflation rate is ~10% per year. This rate will be reduced to the 0.5%-2% range.
There are other differences between BTC and ETH too:
- While BTC block times are set to 10 minutes, ETH features 14-15 second block times.
- ETH mining is less ASIC-reliant.
- ETH does not go through halving events, like BTC does ~every 4 years.
The world’s most traded and used central bank-backed currency, the USD is the main anchor to the fiat world, used by cryptocurrencies. As such, the ETH/USD pair can be considered a de-facto “major”.
In its current form, the dollar has been the official currency of the United Sates and its territories since 1792. The USD was not always a fiat currency. It used to be backed by gold. Its convertibility in this regard has been suspended since 1971 however.
An interesting fact about the USD is that more of it is held outside the US than within the country.
Currently, some USD 1.7 trillion are in circulation world-over. The Federal Reserve continues to print more however, so the supply is continuously inflating.