Ether is the currency that powers the Ethereum network, which is a platform of distributed blockchain computing on which transactions, smart contracts, and distributed applications operate.

Ethereum is a blockchain code environment through which distributed applications, smart contracts, and financial transactions using the Ethereum protocol are tested, validated, and added to distributed ledgers by the mining computers acting as nodes in the network. Ether is the currency, or token, in the Ethereum world which is used to pay the miners and transaction fees which are specific to its blockchain.

The “official” Ethereum sources like to characterize Ether as a “fuel” for the Ethereum “machine” rather than as a currency, but they are quick to describe how it can be converted to and from other popular currencies, which of course means it is a digital currency itself. The size of transaction fees that must be paid by users of the network to process their transactions and use of decentralized apps or smart contracts is calculated as the Gas required to process the transaction. If a user does not put enough Ether in to satisfy the Gas required, the transaction does not go through.

Cryptocurrency traders and enthusiasts can and do use Ether as a store of value or investment position in the same way they would use other cryptocurrencies. At the time of this writing in 2017, Ether has hit its highest valuation since its launch in 2014, at around $450 USD, generating a lot of buzz (and short-selling). Part of the reason that Ethereum.org and other developers choose to describe Ether and the platform in a non-currency way is that Ethereum as a technology was not meant to primarily be a cryptocurrency the way that Bitcoin was; Ethereum’s primary focus and strength is an open-source platform for distributed applications, smart contract technology, and even other cryptocurrencies.

While Ether is one token used in the Ethereum system, it is not the only one. In fact, many many cryptocurrencies using the Ethernet token system ERC20 have been launched as ICOs in the last few years, and there are even ways to interface the Ethereum blockchain with the Bitcoin blockchain.