Ethereum is an open-source public platform that runs smart contracts.
It was proposed in late 2013 by Russian-Canadian programmer Vitalik Buterin, and since its inception in July 2015, it has grown to be the second most valuable cryptocurrency (after Bitcoin) as well as one of the fastest growing blockchain projects.
In this article, we will examine the purpose of Ethereum, its origins, use cases, and other interesting facts about the tod network
History of Ethereum
In late 2013, a 21-year-old programmer named Vitalik Buterin wrote a whitepaper proposing Ethereum, a decentralized platform that allows people to build an app.
The idea behind the platform was to develop a new kind of internet, which would have no administrative body or central servers and use tokens called
Ether (ETH) as its currency.
ETH, the cryptocurrency behind Ethereum, can be bought on exchanges like Coinbase and transferred to one of the many digital wallets. ethereum.org
How does Ethereum work?
ETH (Ether) is the currency in which it is run
Ethereum
This type of cryptocurrency can be created by mining or buying from stock exchanges.
Ethereum, like Bitcoin, exists in a decentralized platform where miners are used to verify and update blockchain technology; This process involves aggregating blocks and selecting transactions for those blocks
There are differences between Ethereum and
Bitcoin
Cryptocurrency transactions with Ethereum do not need to be confirmed every ten minutes, but only once per block
Unlike bitcoins, which have a limit of 21 million
Coins are available for trading. There is no limit to the number of ETH coins in existence
Ethereum has seen rapid investment since it was proposed back in 2013, with over $1 billion invested to date in the network.
In late 2016, ETH coins became more valuable than Bitcoins themselves at $10 billion.
Unlike bitcoins, which take hours or days before being verified, verification happens within seconds when using Ethereum because each node verifies other nodes before they create their own blocks.
What exactly is an Ethereum ICO (Initial Coin Offering)?
An ICO, or Initial Coin Offering, is a fundraising tool that trades future cryptocurrencies in exchange for cryptocurrencies with liquid and immediate value.
Ethereum often uses ETH as its token in its coins.
ETH is short for Ether, and it is the main cryptocurrency on the Ethereum platform.
Ether can be transferred between accounts and used to compensate participants' mining nodes for the calculations performed.
The ETH balance can be calculated by adding up all of your transactions with other users and multiplying that number by their share of the total ETH circulating at the time (known as ETH Total Supply).
Ether: currency
Ether is the currency used in Ethereum.
Ether can be bought, sold, and traded in an open market like other cryptocurrencies.
However, its main use cases are different from other cryptocurrencies.
While the first big use case for Bitcoin was as a peer-to-peer payment system (with an emphasis on decentralization), the first big use case for Ether was as a way to speculate on its usefulness within the Ethereum network.
When you invest in ETH (for example, by buying it with fiat currency or by trading on an exchange), you are investing in ether.
You are speculating that the value of ether will go up (if you don't buy more ETH).
What are the differences between Ethereum and Bitcoin?
Bitcoin, which has been in circulation since 2009, serves an entirely different purpose than Ethereum.
With Bitcoin, you can send money to anyone for any reason.
The only great thing about it is that it can not be faked.
On the other hand, Ethereum serves as a public platform for building decentralized online applications through blockchain technology.
You can buy some ETH like bitcoins and use them to start investing or buy the tokens you like (similar to company shares).
Although ETH coins are not popular, they serve their own useful purposes and can be traded like bitcoin, so if you want to invest in something potentially profitable in the future, this might be what you are looking for!
ETH coins are more complex to handle, but they have several advantages.
Unlike Bitcoin, ETH does not have set rules, and when it comes to investing, there are always some risks involved.
But since Ethereum is still so new compared to Bitcoin, there isn't enough data yet to show what the long-term risks really are.
What is ethereum mining?
Ethereum mining, or ether mining, offers an alternative way to collect cryptocurrency.
Miners create and process transactions on the Ethereum blockchain, and in return, they earn blocks of ETH currency.
Ethereum differs from other digital currencies like Bitcoin in that it does not run on a single piece of hardware to verify and validate transactions - instead, there are many machines around the world running simultaneously with each device adding a piece of its power to the stack.
When a miner successfully verifies and validates a block, they receive newly generated ETH as a reward for helping maintain the network.
How to buy and sell ether
- There are three ways you can buy Ethereum:
- Credit card,
- bank transfer and, most importantly,
- Cash.
We recommend ShapeShift websites as they allow you to buy ETH with a debit or credit card.
These are all reputable and trustworthy exchanges that operate in a very similar way to how you would use electronic gold to buy stocks online
Once you have purchased your ETH, it will be stored on the website for you and can be withdrawn at any time back to your crypto wallet of choice (MyEther Wallet or metamask )
Note that all purchases come with exchange rates that may change over time , so always do some quick research before committing!
One last thing to note about ETH is that its valuation does not correlate well with other cryptocurrencies such as Bitcoin, so if you are looking for an investment opportunity outside of Ethereum, we recommend that you look at Bitcoin Cash instead.
Ethereum smart contracts
Ethereum has an advantage over Bitcoin in that transactions can also be programmed with logic and conditions.
This enables Ethereum to have smart contracts, which are very difficult to create or implement in most other cryptocurrencies, fiat systems, or programming languages.
It is important to note that Ethereum is not just a cryptocurrency. It is a distributed computing platform based on the blockchain.
The Ethereum blockchain is mainly used to power smart contracts.
Ethereum includes several features: transaction blocks; programming language for smart contract functions, ether currency (tradable on exchanges);
proof of work consensus algorithm; peer-to-peer networks with ethernet;
Transfer fee:
Gas Limit and Gas Price - ETH rewards miners who solve crypto puzzles by giving them ETH coins;
Ethereum Virtual Machine (EVM) - A computer program that executes scripts using an international network of public nodes, they validate code execution on the EVM and provide I/O from the computation made.
DApps (Decentralized Applications) Ethereum
As we dive deeper into the Ethereum ecosystem, we'll go over how DApps work and what they are.
Think of a DApp as a program that runs inside the Ethereum Virtual Machine and contains some kind of contract between one or more users.
These smart contracts are how much of the network's decentralized operations work, meaning that anyone can benefit from their services without having to rely on a single company or organization to maintain them.
A good example of this is an ETH-based prediction market like Augur, where participants earn money by trading stocks on the outcome of an event.
If the trader predicts something correctly, he will receive 1% of all markets associated with that event.
DAOs (Decentralized Autonomous Organizations) Ethereum
Decentralized Autonomous Organizations, or DAOs, are a system for managing and completing tasks that do not need a hierarchy to complete.
These types of organizations are completed on the Ethereum platform with ETH.
One example of a DAO would be Kickstarter campaigns.
People involved in project financing don't give money until they know the project will be completed.
The funds for these projects are not taken before they are completed because you will have to rely on the community trusting you with their money without getting anything in return.
This means that any malicious activity could lead to huge losses for those who invested.