When you talk about cryptocurrencies, Bitcoin is the undisputed ruler, but Ethereum is usually the second thing people think of. And while they both really do fall under the same umbrella; their purposes are dramatically different. As a matter of fact, it is quite reasonable to argue that Ethereum itself doesn’t even belong into the category of virtual currencies. An inexperienced crypto trader could at this point ask why we are writing this article then, but the answer will become clear quite quickly. If you want to get a comprehensive grasp about this very special part of the cryptocurrency market, you are definitely at the right place. Keep reading and learn all the basics of a project that could very well change the way internet works!
So, what is Ethereum and how does it work? Well, Ethereum is actually a platform created with the goal of providing an alternative to the client-server model which is predominantly used today. In this standard model, we store a huge amount of our data in places we don’t really control. Articles, passwords, sensitive financial information… everything has to be stored on servers which are controlled by a third party. Yes, this third party can provide you with excellent care and support, but it can also manage what its servers contain and sometimes even forbid you to access something. In addition, large amounts of data in one place are excellent targets for hackers. Ethereum is trying to solve these problems by using blockchain technology and nodes scattered all over the world. Each node contains the same copy of the network’s blockchain, which is then gradually but simultaneously expanded upon with new blocks. This makes the data in these blocks readily accessible to everyone and safe, so the need for third-party services becomes obsolete. But what does all of this have to do with cryptocurrencies? Read on and find out.
In order to be able to do anything on this platform, you have to chip in for the costs, and that’s where ether comes in. This is the cryptocurrency used on this platform, but while you can approach it as you do all others (i.e. you can buy it or sell it), there is one more way you can use it. You see, every action you want to undertake on the network, whether it’s creating something new, editing something that exist or simply deleting something you don’t need anymore, will require you to pay a fee in ether. That’s the energy that keeps the platform going. Given how popular this platform is, many people are constantly working on it and they need ether for their work to be acknowledged by the network. So, when you’re asking about Ethereum price, you will in most cases be referring to ether’s price. But why hasn’t the cryptocurrency market reacted to this? Why are Ethereum and ether still almost synonymous with each other? Well, the reason for that is a split in the community, and you can find out all about it in the next paragraph.
In June 2016, The DAO came under attack. Now, The DAO was a project on the Ethereum blockchain which was supposed to provide a new way for people to conduct their business, regardless of their goals. DAO stands for decentralized autonomous organization, and its code was open-source. It initiated one of the largest crowding campaigns in history, which raised more than 150 million dollars. It turned out, however, that the code was lacking, and approximately 30% of the funds disappeared. To mitigate this, the community decided to perform a hard fork in order to reclaim the funds. This was opposed by some people, though, who insisted that the code should not be changed like that and who therefore kept using the same old version of the blockchain after the hard fork. They took the name of Ethereum Classic, while the majority of people, those who went with the newly established blockchain, maintained the name Ethereum. So, when we talk about Ethereum price or stuff like that, we mean blockchain which was formed on July 20, 2016, and which is now the most popular and valuable version.
Let’s now get back to the way Ethereum platform works for a moment. The most important part of its architecture are smart contracts, prescribed and unchangeable sets of rules which will be executed when the right conditions are met. They are run in Ethereum Virtual Machine (EVM) and can be used to build completely decentralized apps (dapps) or even whole decentralized autonomous organizations (DAOs). This is why Ethereum is so popular – it is a way to program in this manner without limitations, but with clear and very strong security. It also supports numerous programming languages (Solidity, LLL, Serpent etc), which also adds to its popularity and makes sure the community remains big. Once again, this is what separates ether from Bitcoin and other cryptocurrencies: with ether, you can create or modify things on this platform, not buy things. Its value comes from being able to provide people with the power needed to come up and work on their decentralized projects. With all that out of the way, let’s take a look at the market side of things. This will probably be much closer to you, so don’t go away.
Given that Ethereum is considered by many to be the number two cryptocurrency in the world, it’s not very difficult to find a broker or an exchange that will allow you to trade it. What you have to be careful of is the type of trading offered to you. You see, with exchanges you actually get to buy Ethereum and use it as you see fit. Brokers, on the other hand, usually allow you to invest in a coin’s price through CFDs or some other instrument. Therefore, you will not actually own the coin, just win some profit if you make the right prediction. What is important to note is that you won’t need an Ethereum wallet (more about that below) if you decide to go with a broker and want to just speculate on the currency’s price. This way, everything can be done via your trading account. If you want to actually own Ethereum and move it whenever you want, however, a wallet will be necessary.
At the moment of writing this article, Ethereum to USD exchange is about 960$ for one ETH, but the last year saw it rise way beyond that. 13000%, to be exact. Yes, 13 THOUSAND percent. At one point, Ethereum price was over 1400$. Compare that to Ethereum Classic (ETC) which is at the moment below 30$.
Since we mentioned it in the previous paragraph, let’s now take a look at which Ethereum wallet would be the best for you. Before we list a few examples, though, allow us to say that the principle of storing your ether and other cryptocurrencies (like Bitcoin) is pretty much the same. Your Ethereum wallet works like any other – you have your private and public keys which allow you to send ether to each other, it can be a paper wallet, hardware wallet, software wallet etc.
There are several good choices out there. First, you have the official Ethereum Wallet created by the people who run the Ethereum Project. Sometimes, it is also called Ethereum Mist Wallet because it is based on the Mist web browser. Given who is behind it, it’s no surprise that this is considered to be one of the safest ways to store your ether. You can store this cryptocurrency and everything else built on Ethereum there, plus it’s completely free. Just download it and you’ll be all set.
However, the official Ethereum Wallet can be too technical for some traders, so maybe another wallet could be the solution for you. Coinbase is probably the simplest way to resolve this, but Jaxx is also recommended a lot. The latter also supports Ethereum Classic, which is something very few wallets can say for their offer. In any case, there are a lot of options out there, so see what you need and then make your decision. We have more to discuss, so we won’t dwell on this subject anymore. Let’s move on!
If you don’t want to buy Ethereum (ether), you also have the option to mine it. In its essence, Ethereum mining is pretty much the same as any other cryptocurrency mining process. You have blocks that need to be verified, you have miners performing the necessary actions and you have new ethers being introduced into circulation that way. At the moment, new blocks are being introduced approximately every 15 seconds, while the reward is exactly 3 ETH for a block. Of course, mining pools and calculators exist too, so a lot of things are very similar to other cryptocurrencies.
However, when you scratch the surface a bit, you will see that there are some features that make Ethereum mining stand out from other similar processes quite a lot. First of all, there are indications that Ethereum will switch to proof-of-stake, something that was confirmed even by its creator Vitalik Buterin. It is still not known when exactly this turn will take place, so keep your eye on Ethereum news, but there is a fairly strong possibility that it could happen in 2018, which will affect miners in a big way making them essentially obsolete.
Another notable difference is connected to Ethereum mining hardware. The proof of work used for this blockchain is called Ethash, and it has been deliberately designed to be resistant to ASIC rigs. This allows people to keep using GPUs, which have been rendered completely useless by ASICs in Bitcoin’s case.
Just to give you an idea of how serious things are in this case, we will mention something called the Enterprise Ethereum Alliance. This organization was founded in early 2017 by 30 different companies, but very soon others started joining, and in just a couple of months the number swelled to more than 100 companies. Now, these are not some no-name brands, oh no. At the moment, the EEA includes such behemoths as Toyota, Samsung, Microsoft, MasterCard, Banco Santander and even Cornell University.
What they’re working on is a version of Ethereum blockchain that is called a permissioned blockchain, which means you need some credentials to access it, to put it in simple terms. They are also considering various collaborations and possibly even linking their private blockchains to Ethereum altogether. In any case, it’s no wonder the Ethereum price went up so much last year when the network has such giants backing it up. And since they’re just getting warmed up, we can expect a lot of interesting news about this platform in this year, too. Ethereum is here to stay, that much is pretty evident, and its development is definitely in good hands.
On the cryptocurrency market, Ethereum (and ether) is second only to Bitcoin. However, although they might appear very similar at first, if you make a more detailed Ethereum vs Bitcoin comparison, you will see that there are some big differences between the two. Ethereum aims to revolutionize internet as a whole and use blockchain technology in a much broader scope than Bitcoin does. The process of mining is also somewhat different, and this difference could grow even more in the future.
But the future of this platform is secure, and the Enterprise Ethereum Alliance is the ultimate proof of that. Some of the most powerful companies in the world have joined together here with the goal of researching and improving this blockchain. That’s why we expect a lot of interesting Ethereum news in 2018. So, if you want to buy Ethereum, do not hesitate. It’s certainly showing a lot of promise. In the long run, it could be an excellent investment decision. But if you want to learn more before you make your move, this website has everything you need. With our help, you will find the best way to make your Ethereum to USD (or any other currency, for that matter) conversion. Our experts are at your disposal – don’t be afraid to see what they have to say.
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