When you think about another cryptocurrency aside from Bitcoin, what comes to your mind? You most likely thought about Ethereum. It is the top Bitcoin alternative, ranking as the second most liquid and large-scale crypto by market capitalization after BTC.
Ethereum also gave way to unique crypto tech such as smart contracts. It has great potential as a digital asset with strong backing from both its developers and community. This means that it has a more solid chance of being a stable virtual currency that can increase in value over time.
Learn all there is to know about Ethereum cryptocurrency here at CryptoShimbun! Stay updated with the latest news and trends of one of the leading crypto tokens in the market.
Beginner’s basics: What is Ethereum cryptocurrency?
Ethereum is easily distinguished from other crypto tokens and altcoins in the market because it runs on smart contracts. According to its website, it is the world’s only programmable blockchain which means it is a decentralized and community-built system.
The software platform was first developed in late 2013 by programmer Vitalik Buterin who sent out his white paper idea to his friends. By early 2014, Buterin formed a team of developers to further work on it. It involved Mihai Alisie, Anthony Di Iorio, Charles Hoskinson, Joe Lubin, and Gavin Wood.
It was later on presented at a Bitcoin conference in Miami. To fund its expansion, the team also held a crowd sale of the native token Ether (ETH). It raised about 18 million USD by August 2014. In July 2015, its first platform called Frontier was launched.
Ethereum permits developers to build and deploy Decentralized Apps (DApps) and Decentralized Autonomous Organizations (DAO). In the simplest term, it allows users to make agreements with each other, as well as directly buy, sell, and trade without the need for a third party.
How does Ethereum work?
The creators of Ethereum based its blockchain design on Bitcoin’s protocol with some changes to support more functions other than money systems. This means that ETH does not just act as virtual money.
Its blockchain is a trade-based state machine that shifts into a new state based on the series of input it reads. Each of its states has millions of processed transactions linked to form blocks.
Each action carried out in the network requires a workload of computational power and time (coined as ‘gas’) to process the trade. This means that whenever a miner creates and validates a block, new Ether tokens are released as an incentive.
The Ethereum cryptocurrency is a digital bearer asset you can use for peer to peer transactions. Be that as it may, it is also the lifeblood of the blockchain that runs through a global network of computers. This network then forms a supercomputer that governs smart contracts.
Smart contracts are codes that automatically carry out conditions that have been met. Since the contracts are self-fulfilling, they allow ‘trustless’ transactions that remove the need to use a third-party platform. This makes the blockchain immune to alterations and fraud.
Why use Ethereum
Like Bitcoin, Ethereum offers different kinds of benefits you can make the most of. Here are some of the reasons why you should use ETH:
- It is a decentralized platform. Since smart contracts are self-executed, apps are based on a network formed using the consensus mechanism. This is used to agree on the soundness of a transaction so censorship will unlikely happen.
- It has an immutable blockchain. This means that once the data is recorded, no one can make any more changes to it. Hence, it is nearly impossible to hack because even its uploader can’t edit the transmitted data.
- It offers fast trade actions. Due to the automation of blockchain transactions, there is no need to wait for a lengthy confirmation and clearance process. Because of this, transaction fees are cheaper compared to other platforms.
- It provides a secure network. Ethereum has three times more nodes than Bitcoin so there is no central point of failure. All transactions on the blockchain are also well protected from frauds and hacking attacks due to cryptography.
- It is reliable. Its blockchain has been active for three years with zero downtime. Apps built on its platform are programmed to never be switched off or corrupted.
How to get Ethereum cryptocurrency
Since Ethereum has a programmable blockchain, its developers and users can shape ETH in many ways. If you are interested in getting Ethereum cryptocurrency, there are two primary ways to obtain it.
- Ethereum mining
You can get Ether by mining them. Its network uses a ‘Proof of Work’ system that allows miners to contribute their computing power and solve a complex math problem. This seals off and confirms a block of actions within the network.
The algorithm for Ethereum’s Proof of Work employs is called ‘ethash’. Due to the way it is programmed, mining for ETH is harder and requires more memory and costly equipment. It needs ASICs which are highly specialized mining chips used to profit from mining.
When miners successfully complete the task, they are given a reward for every block they mine. For each new block processed, a miner is paid 2 ETH while a miner’s hash rate depends on the mining hardware.
- Ether trading
The most common way to get Ether is to buy it. Ether trading on crypto exchanges is one of the most convenient means to purchase it. All you need to do is find an exchange site that operates within your jurisdiction and trades in ETH.
Some of the best and most trusted crypto exchanges where you can buy and sell Ethereum cryptocurrency are:
After setting up an account on your preferred exchange site, you can use different kinds of ways offered by the platforms to pay for the transaction. There is a wide range of payment options you can choose from such as:
- Bank account
- Wire transfer
- Debit/credit card (Visa, Mastercard, etc.)
- Digital coins (BTC, LTC, XRP, etc.)
- Online brokers (PayPal, eToro, etc.)
You can also get Ethereum cryptocurrency through peer to peer trading wherein you pay for the token with any currency agreed upon. This can be done both online and in-person.