Cryptocurrencies have been a major talking point over the past several years because of their huge gains and significant price swings. While bitcoin has been a leader in the crypto world, ethereum is another major player that powers smart contracts, digital apps and payments.
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Unfortunately, to most people, ethereum is like a foreign language. So I decided to turn to ChatGPT to explain ethereum to me as if I were a 12-year-old. Here’s what it said.
Also see the the five best cryptos to invest in for 2026, according to experts.
What Is Ethereum?
Most people know bitcoin as a digital currency you can use in certain places to pay for things or send to other people. Ethereum, on the other hand, is more like a giant computer that anyone can use.
When asked, ChatGPT said, “Ethereum is a blockchain platform that allows people to send digital currency (called ether or ETH). It also provides the ability to create digital contracts that run automatically or create apps that operate without a company in the middle.”
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How Does Ethereum Work?
“To understand how ethereum works, it’s easiest to think of a Google Doc. Instead of just one person controlling the Google Doc, thousands of computers around the world keep copies of it. When an update is made, everyone else updates their copy as well,” ChatGPT said.
Ethereum is special because it’s a blockchain. For those who aren’t familiar with blockchain, it’s like a notebook that records transactions, can’t be erased and is shared with everyone.
Another aspect of ethereum is smart contracts. Think of them like a vending machine. You put money in, you get what you want, and there’s never a need for a human.
How Can Someone Invest in Ethereum?
While ethereum can be used as a form of currency, it’s also possible to invest in it as well. Someone can purchase it through a crypto brokerage. You’ll be able to store the purchased coins in your brokerage account or a crypto wallet.
You can also invest through a traditional brokerage account by purchasing an ethereum exchange-traded fund (ETF). One example is the iShares Ethereum Trust ETF (ETHA).
Is Ethereum a Good Investment?
If you’ve never invested in ethereum, you might be wondering whether it’s a good investment. Like most cryptocurrencies, it has experienced significant price swings. In 2020, it traded below $200. But then in 2021, it climbed well above $4,000. That’s a massive price increase that created a lot of wealth for some people. However, by 2022, the price had fallen back to around $1,000. Today, it trades at around $2,000.
When ChatGPT was asked whether ethereum was a good investment, it said, “If you’re comfortable with the large price swings, investing in ethereum can be a nice addition to an investment portfolio. However, most financial advisors recommend that crypto only make up a small percentage of your overall portfolio value.”
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT To Explain Ethereum to Me Like I’m 12
