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Is Ether a coin, a token, or a digital currency?
The cryptocurrency world can be both enticing and confusing. There are reports that some people have earned a fortune by opportunistic buying and selling of cryptos. The list of ‘Bitcoin millionaires’ is long and the term itself is quite alluring. The current year, however, has come as a necessary reminder that cryptos, be it the biggest Bitcoin or smaller altcoins, are risky and their value can drop sharply.
This year has reignited discussions around whether Bitcoin and its peers like Ether (ETH) and Dogecoin should be called currencies or whether it is better to call them tokens, if not speculative assets. Bitcoin was launched so that blockchain technology could be used in global financial transactions; however, the progress in this regard has been dismal. Bitcoin and later cryptos are used more as investment assets by people than as media for payment.
Against this backdrop, should ETH be considered a currency, a coin, a token, or something else? Let us explore this here.
Ethereum.org – the website supported by Ethereum Foundation, the founder of the blockchain network – maintains that Ether is a cryptocurrency. The problem is that there is a lack of consensus on the actual meaning of the term ‘cryptocurrency’, with many, including the Australia Taxation Office, using the term ‘crypto assets’. But this debate aside, the question is what actually is ETH and is it competing directly with Bitcoin?
Etheris the ‘money’ for Ethereum’s blockchain services. If a developer wants to use the network to deploy a new decentralised app or to create a new nonfungible token, the payment must be made using ETH. By this measure, ETH is Ethereum’s internal mode of payment and store of value for people using the services.
Data provided by CoinMarketCap.com
Ethereum.org states that other cryptos created using the network are tokens. These are the so-called ERC-20 tokens and include popular names like Shiba Inu (SHIB). SHIB is considered a ‘meme token’, and some other categories are gaming, metaverse, and stablecoin. Ethereum itself, however, does not categorise Ether among tokens. It specifically maintains that the ETH crypto is money within Ethereum and by this measure, it competes with Bitcoin, which is meant to change the global payment landscape.
It is very hard to find a consensus on most of the aspects within the cryptocurrency world. Can Ether become a widely adopted digital currency outside of its native Ethereum network? Or will it remain a coin confined to the network? In a short explainer on Ethereum.org, ETH is considered not the same as tokens built on Ethereum’s blockchain; instead, it is labelled a cryptocurrency.
Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.
Ankit is a law graduate. He holds an interest in public policy, corporate ethics, development economics, macro-economic policies, and sustainable development….
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