What Is Ethereum?
A lot of services which people use today are centralized. As, for example, bank stores your funds and the central authority controls it. But there are decentralized platforms and Ethereum is one of them.
What is Ethereum definition? What is Ethereum cryptocurrency value?
Ethereum is a decentralized open-source, blockchain based, public computer platform, which allows “smart contracts” (which perform automate sending money) and DApps (Distributed Applications) to be based and run without any third party interference, fraud or downtime.
Centralized services have not such a great security system as decentralized. It should be mentioned that Ethereum app does not require giving its private information to its developers or somebody else. Using Ethereum you may be sure that your private information is yours, but not somebody else. Only you can manage your funds.
Ethereum provides a decentralized EVM (Ethereum Virtual Machine), which main task is to perform scripts using an international network of public nodes. It serves as a runtime environment for smart contracts, which are very popular nowadays. It should be mentioned that the EVM has been mentioned at in the Yellow Paper designed by Dr. Gavin Wood.
Ethereum cryptocurrency is the second largest and valuable digital money form after Bitcoin. The technology which runs this digital form of money is called Ethereum.
Ethereum is a planetary scale computer, which is powered by a blockchain technology. Applications built on Ethereum run exactly as programmed, without any possibility downtime, censorship or third-party interference.
Ethereum is an open software platform based on blockchain technology that allows developers to create and deploy decentralized apps.
Ether is the digital currency of Ethereum network platform. Ether tokens aren’t controlled by any bank or government. It is an open network which is managed by its users. Ether is the form of payment to the machines which perform various requested operations.
Ether fulfills the functions of a convertible means of payment. Moreover, it is also used by application developers to pay commissions and services. The process of Ether receiving is similar to the Bitcoin’s mining, what means that it can be traded around the web as well as mined. Ether is a token which is used to pay for the Ethereum platform.
The History of Ethereum?
Vitalik Buterin, a programmer from Toronto, decided to invent a new platform which would go beyond the scale of financial use cases permitted by Bitcoin. The first step to the success he made occurred in 2011 when he showed his great interest in Bitcoin cryptocurrency and blockchain technology. Later, in 2013, the issuer a white paper, describing a new platform, designed for any type of decentralized application developers. As a result, this 19-yeared programmer invented a new Bitcoin-based platform and called it Ethereum. For his invention, Buterin was named a Thiel fellow in 2014.
How Does Ethereum Work?
Ethereum applications are run on a specific token which is called “ether”. The main Ethereum innovation is the virtual machine (EVM). It runs on the Ethereum network. It allows you to run any program, regardless of the programming language on which it is written. Thanks to the Ethereum virtual machine, the process of apps creating which is based on the blockchain, becomes much easier and more efficient. Instead of creating a new block for each application, Ethereum allows you to develop thousands of different applications on a single platform.
Ethereum allows its developers to create decentralized applications, which serve for a definite aim. Any centralized services may be decentralized with the help of Ethereum (decentralized app are not coordinated by any central organization).
Ethereum can be used for DAO creation. DAO is a fully decentralized autonomous organization which has no management system. DAO work organization is provided by the program code, a set of “smart contracts”.
The code replaces the traditional organization structure, eliminating the necessity centralized management. This organization is owned by everyone who purchased tokens, which provide the right to vote.
What Are The Benefits Of The Decentralized Ethereum Platform?
Ethereum and Bitcoin
A lot of people are interested in fact what differs Bitcoin from Ethereum and what they have in common.
Firstly, Bitcoin, as well as Ethereum, is an open-source network, which is based on the blockchain technology.
Ethereum differs from Bitcoin by its technical characteristics. They have different possibilities and aims.
Bitcoin offers blockchain technology, the system of electronic money transfer between individuals, which allows you to make online payments using bitcoins.
Bitcoin’s blockchain is used to trace ownership of digital currencies (bitcoins). A blockchain of the Ethereum provides the work of the program code of any decentralized application.
The transaction speed process is also different. Ethereum “block” time is 12 seconds, while in Bitcoin it takes 10 minutes.
Ethereum blockchain is similar to Bitcoin’s because it is a shared record of all the transaction history, where every node stores a copy of the history. The biggest difference leads in function of its nodes. Ethereum nodes store the last smart-contact state in addition to all the Ethereum transactions.
The main goal which Bitcoin leads in anonymous, decentralized, irreversible transactions opened to all the network participants. The blockchain of Bitcoin cryptocurrency is used to record all the transactions information that has ever been conducted on the network and current ownership rights.
Ethereum blockchain writes all the program code information and the work of all the decentralized applications is also provided on the Ethereum. So, the main Etherium purpose is to provide a decentralized platform for application developers.
Instead of the mining process, which is a Bitcoin’s characteristic feature, Ethereum is able to provide a cryptocurrency token which is called “ether”. Ethereum cryptocurrency is a token which “feeds” the network. Cryptocurrency Ethereum value leads also in paying services and transaction commissions in the Ethereum network.
Ethereum blockchain allows you to create “smart contracts”.
The smart contract is a computer code that is able to facilitate money exchange, property, shares or any valuables.
When working on a blockchain, the “smart contract” becomes an automatic computer program that independently executes the code when certain conditions arise.
Since “smart contracts” work on a blockchain, they execute the code as it was prescribed, without the influence of censorship, idle time, fraud or interference by outside parties. Smart contract technology can automatically conduct transactions on the Ethereum blockchain. It is believed that in future smart contracts will help revolutionize not only the financial world but the development of various industries too.
How To Invest In Ethereum?
If you want to invest in Ethereum, you’ll need to create a digital wallet. Coinbase is recommended as the most secure wallet for Ethereum. You need to be aware of all the Ethereum investment information, concerning all the steps you should follow with.
Cryptocurrency is a digital currency and it is relatively a new form of money. It is decentralized and not regulated or managed by any government control. It works as any fiat currency.
Ethereum cryptocurrency is a relatively new form of money that is why it does not mean that there is no risk associated with it. Every investor whose aim is to learn more about Ethereum investment should know the next info, which concerns some potential risks of Ethereum cryptocurrency:
Where to Buy Ethereum?
If you want to buy Ethereum coins you can do it easily at any of the Ethereum exchanges. Your funds may be stored in your wallet or on the exchange itself. But the easiest and the best way to buy Ethereum cryptocurrency is through the exchanges.
As you know, Ether is the digital currency of Ethereum. In order to receive Ethereum tokens, you need to start mining. So, what is Ethereum mining and how does it work?
Mining is the process of gaining cryptocurrency tokens from the block system. In the process of Ethereum mining, the computers run a hash algorithm, which takes a large amount of information and compresses it to a string of letters and numbers of fixed length.
Ethereum Mining is the process of mining Ether. It is a less expensive way of transaction running than buying Ether.
For Ethereum mining, the network produces one block in every 12 seconds.
If you are aimed to use a private network, then a computer with normal CPU will be able to run the network and earn test Ether through the mining process. On the live test, the normal computer will be not very comfortable, because it will take a very long time to mine the block and get Ether in reward.
The hash algorithm which is used by Ethereum is called EtHash. How does it work?
It hashes the last block’s metadata in the system, using a special code called nonce.
For each new block in the blockchain, the network sets the target hash value. All the miners on the network try to guess the nonce value which will lead to this target value.
In general, there is nothing new in Ethereum mining process. The process of Ethereum mining is similar to bitcoins. Miners use computers and solve different puzzles until one of them wins and receives a reward. You are able to sell your Ether after mining.
The Ethereum network is kept by numerous computers all over the world. The computer who could make the latest block in the chain is rewarded. In average the process of appearing a new block with the last transactions processed by the network is added to the blockchain every 15 seconds. The computer which created this block receives 3 Ethers.
The Best Ethereum Wallets
There are 3 types of Wallets:
Paper wallets are the most secure way to store Ethereum. It means private keys which are written on a piece of paper and stored in a safe place. You may do as many copies of your keys as you want. Paper wallets are impractical for everyday usage. They provide maximum security and are used for long-term investments.
Hardware wallets provide a great security because they are not connected to the Internet. Hardware wallets mean a simple device which you use in order to put your Ether private keys on. Because the private keys have not access to the Internet, they cannot be hacked. If they cannot be hacked, your Ether private keys are in a safe place so cannot be stolen. Among the most secure hardware wallets are Nano Ledger S and Trezor wallets.
Desktop Wallets’ security level takes the second point on the wallet security scale nowadays. There are a lot of desktop wallets, but talking about the best Ethereum desktop wallets, Jaxx and Mist wallets are the most recommended:
- 1 What Is Ethereum?
- 2 The History of Ethereum?
- 3 How Does Ethereum Work?
- 4 What Are The Benefits Of The Decentralized Ethereum Platform?
- 5 Ethereum and Bitcoin
- 6 How To Invest In Ethereum?
- 7 Where to Buy Ethereum?
- 8 Ethereum Mining
- 9 The Best Ethereum Wallets