What is Ethereum: Guide to Ethereum blockchain and Ethereum cryptocurrency

What is Ethereum: Guide to Ethereum blockchain and Ethereum cryptocurrency

When it comes to Ethereum, the answer often starts with the counter-question, i.e., Ethereum blockchain or Ethereum cryptocurrency?

Ether or commonly known as Ethereum ETH happens to be one of the most famous cryptocurrencies globally, or better yet, one of the world’s major altcoins. For those wondering what an altcoin is, any cryptocurrency that’s not Bitcoin is an altcoin.

Like any other cryptocurrency, Ethereum operates on blockchain technology, the Ethereum blockchain. The platform aims to operate as a decentralized internet and app store.

Ethereum was founded by Vitalik Buterin back in 2015. The cryptocurrency holds a market capitalization of $41.2 billion US Dollars. The current market cap is the total value of the asset in the world. 

The Ethereum blockchain concept

The Ethereum blockchain is a decentralized network that offers secure transactions by using a network of systems. Each node in the network maintains a shared database. There are numerous nodes in the architecture; all each node stores the ledger.

The number of nodes that form the network determines how secure the network really is—the more the nodes, the safer the network.

All information needs to be verified by the shared database held by each node. A simple majority determines whether the information is correct or not before it is permitted to enter the blockchain.

This means that any hacker will be required to control most of the network’s nodes to sabotage the consensus. Doing so will come at a very high cost, and therefore it wouldn’t really be beneficial for the hacker.

How is Ethereum different?

Ethereum’s blockchain is a bit more advanced than the one used by Bitcoin. This is primarily because on the Ethereum blockchain, and smart contracts are the deciding factors of the rules that allow any transaction to occur. These smart contracts cannot be altered after they’re written down.

The second feature that sets Ethereum’s blockchain apart from Bitcoin’s is the Decentralized Applications that operate on the blockchain technology. dApps are not controlled by any particular individual.

These applications do not ever go down, and they cannot be switched off, which means that there’s no downtime on the Ethereum platform.

On Ethereum, anything can be calculated as long as there are enough computing power and time to perform the calculations. This means that the platform’s code is Turing complete, which adds to the already limitless tasks that are performable on the platform. 

The DAO

Decentralized Autonomous Organizations (DAO) are also built with the help of Ethereum. These organizations are run with the help of code instead of an individual. Those who buy tokens have control over the DAO. Tokens also give users the right to cast votes and own shares.

A DAO operates with transparency and becomes completely independent of human control or intervention.

Ether or Ethereum cryptocurrency

The currency used on the network is called Ether or ETH. It is bought, sold, and thus traded over the market. Ethereum cryptocurrency is used to perform transactions on the Ethereum platform. Ether is the digital money that keeps the Ethereum platform up and running.

Ether is also used to pay the transaction fee based on the amount of gas that is spent while performing any action on the platform. The digital currency does not require a third party to process payments.

Ethereum can also be used as a platform for launching more cryptocurrencies. This can be done by the fundraising strategy that allows the token issuers to raise an amount in a crowd sale, which can then be claimed in Ether.

ETH price history

The cryptocurrency traded under a dollar for about a year after it launched. Ethereum shot up from $0.95 to over $20 in the first half of 2016. When the crypto market turned bullish in December 2017, the altcoin had hit highs above the $850 mark.

In January 2018, Ethereum reached an all-time high of $1432.88 US Dollars. Currently, a single Ethereum costs $363.44 US Dollars on Bitstamp. While the cryptocurrency recently hit a two year high.

Some analysts are of the opinion that the cryptocurrency will hit the thousands again this year, while many believe that the altcoin will overtake Bitcoin’s market cap.

Mining the Ethereum coin

Essentially, the process of cryptocurrency mining includes solving complex mathematical problems. The time any computational power spent during mining is taken as proof of work for the Ethereum network, which is used to verify the transactions made using Ether.

Miners also pump in new crypto into the network, which they get from performing the task of mining. 

Mining has become a more centralized activity, especially in the case of Bitcoin. This is because the mathematical problems become more and more difficult with the addition of more miners.

Initially, people could mine the cryptocurrency on their personal computers. However, now the task requires so much processing power that only big computing rigs can process such computational problems.

As a result, only large companies can bear the expense of owning such computing rigs that can mine the cryptocurrency and benefit from it. 

Ethereum works somewhat differently due to the addition of the proof of work algorithm. These work functions, also referred to as Ethash, allow such miners to benefit from the computational power that they put into the mining.

Ethereum is mined much quicker than Bitcoin because of its GHOST protocol that allows such quick mining confirmations. 

Spend on Ethereum blockchain?

If you’ve already mined some Ethereum or bought it, and now you’re looking to purchase something out of it, we reckon your first go-to will be an exchange. Given the cryptocurrency’s reputation, it is accepted at all major exchanges in the world.

It is believed that some fintech companies are planning to release cards that users can top up with Ethereum. Once you’ve knocked some ETH into your card, you’ll be able to buy stuff using the crypto once it gets converted into dollars.

Ethereum is a well-renowned platform in the industry. Many platforms are actively being associated with Ethereum and its coin, which only brings more opportunities to the table for this decentralized platform.

LEAVE A REPLY

Please enter your comment!
Please enter your name here