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What is exactly Ether currency in Ethereum? Is it a token or a set of some functions that generate some tokens? If so, how many of those functions exist and what do they do? Are they hardcoded in the source code or are they programmed within the virtual machine? Because, Ether can not be a token, since tokens must have to have a finite amount in quantity according to the documentation I have read.

Or is it a contract address that does some token generation?

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Holding "ether" on the ethereum network allows a user to perform computations on the Ethereum virtual machine (EVM). Users holding ERC20 tokens must use ether to transfer their tokens to another user or address. In fact, anything done on the ethereum blockchain must be paid for in ether. Ether is stated to not be a currency (unlike Bitcoin) and is solely used as fuel for the EVM.

Ethereum was created largely in an ICO (premine) but is also mined today at a rate of 5 ether/block in a similar way to bitcoin. It is not a "token" as you state, but the native currency of the ethereum blockchain.

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  • if it is not a token, then how is it stored? where exactly is it stored? in some variable that belongs to user record? – Nulik Sep 30 '17 at 4:19
  • To be slightly more technical, the "account state" is stored in a Merkle-Patricia tree which is an immutable data-structure that comprises the Ethereum blockchain. The account state is defined as: nonce, balance, storage root and code hash. Please see the Ethereum white paper at yellowpaper.io section 4.1 for more info on the Ethereum blockchain and account state. – Alex Oct 2 '17 at 2:44

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