Ethereum is the second largest cryptocurrency in the world behind Bitcoin. It's been actually growing a lot faster than Bitcoin. BTC has grown around 300% this year but ETH is up about 4000%.
And then what's really interesting is: not only is it growing quickly, but if you visit other exchanges, it's becoming much more used.
What's happening is BTC is being used as a way to store value but because of the transaction costs and the slow network time, trading ETH is actually winning out and they dominate the list mainly because it is being used a lot more for transactions and it got a lot of advantages with the better block time and the better technology.
So it's being used in favor of those and then once people have the transaction done, they'll convert it in a Bitcoin and store the value there.
Bitcoin is Awesome! But… It is only has one function: currency. Proof of Work is very wasteful energy-wise. What if you wanted to do more with “Blockchain Technology? ENTER ETHEREUM …
The short answer is that Ethereum is an application platform.
Ethereum is an application platform for "Not just money! Asset issuance, crowdfunding, domain registration, title registration, gambling, prediction markets, internet of things, voting, hundreds of applications!"
Blockchain technology is useful for far more than keeping track of a currency's balances, and Ethereum lets developers build applications without having to build their own blockchain.
These applications can interact with each other on the blockchain, so a library of useful functionality will gradually build up.
Ethereum has shorter block times, which makes some applications more feasible.
The Ethereum blockchain will transition from proof-of-work to proof-of-stake, which will affect the security of the blockchain and the value of ether.
ETH fixes key features of bitcoin (12 second vs 10 minute transactions) through smart handling of stale blocks, actual memory hard mining algorithm (unlike Litecoin that didn't turn to be) and adds a whole new dimension to the blockchain with the built-in VM and computer.
On a side note, Proof of Stake is a really cool feature if it works, but Ethereum doesn't have it, only the promise that it would hardfork to it if a viable solution is found.
Downside is that Ethereum doesn't have a cap on number of coins, which means it has high inflation (20% a year right now). Also, Ethereum uses A LOT of disk space, over 1GB is added every month.
the key difference is the ability of the Ethereum Blockchain to store arbitrary state (values stored in arbitrary user-defined variables). In contrast the Bitcoin blockchain is currently limited to storing BTC transactions (account A sends N BTC to account B).
