What is Ethereum?
Ethereum (ETH) is the second most popular cryptocurrency in the world and one of the most influential players of the crypto market. Founded by Vitalik Buterin and Gavin Wood in 2015, today Ethereum holds the second place in terms of market capitalization.
In this guide we’ll give information about Ethereum and its network.
When and Where Did Ethereum Appear?
The Whitepaper of Ethereum was released in 2013 by programmer Vitalik Buterin. Additional founders of Ethereum included Gavin Wood, Charles Hoskinson, Anthony Di Iorio and Joseph Lubin. In 2014 Gavin Wood released The Yellow Paper (a technical definition of ETH protocol and development work began and the network went live on 30 July 2015.
On 15 September 2022, the most important event of the year happened: Ethereum transitioned its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS). This process is known as “the Merge”.
What is Ethereum?
Ethereum is a global, decentralized ecosystem for building apps and organizations, holding assets, transacting and communicating without being controlled by any central authority. The ETH blockchain utilizes the PoS (Proof-of-Stake) consensus algorithm.
Ethereum network has its own native token, Ether, which is used to buy and sell goods or pay for certain activities on their ecosystem. Ether reinforces the Ethereum financial system. You can use ETH as collateral to generate entirely different cryptocurrency tokens on Ethereum. You can also borrow, lend and earn interest on ETH and other ETH-backed tokens.
What’s unique about Ether?
Many assets are based on Ethereum, but there is something unique in Ether. What is it?
-When you make any transaction with Ethereum token or use an Ethereum app, you must pay a fee in ETH. This fee is an incentive for a block producer to process and verify what you’re trying to do.
-The work validators do, and the capital they stake, keeps Ethereum secure and free of centralized control. ETH powers Ethereum.
How Does Ethereum Blockchain Work?
All cryptocurrencies use blockchain technology and Ethereum is no exception. To better understand how the blockchain works, imagine a very long chain of blocks, each of which stores information and each user sees it. After checking, the block cannot be deleted or changed. This makes the blockchain very secure.
As a consensus mechanism, Ethereum uses the proof-of-stake algorithm: participants, who are called validators, create new blocks and work together to verify the information contained in them, pledging a “stake” of crypto assets. The reward depends on how much of an asset the participant has committed and how long they have been staking for.
You can find the information about the state of the blockchain, a list of attestations (a validator’s signature and vote on the validity of the block), transactions in the blocks.
What Can Ethereum do?
Privacy
There is no need to provide personal data using Ethereum. DeFi gives an opportunity to own your funds without third-party organizations.
Bank in your pocket
All you need to control your money — an internet connection.
A peer-to-peer network
You can send or receive money anywhere in the world in a couple of minutes without a third-party.
Independent
The Ethereum Network isn’t controlled by the government or company. Such decentralization means that nobody can stop you from receiving payments or using services on Ethereum.
Development
As all apps are built on the same blockchain with a shared global state, they can build off each other. This allows constantly improving products.
What is the difference between Ethereum and Bitcoin?
Of course, Ethereum is based on Bitcoin’s innovations, but there is a great difference in their purpose of creation and way of use.
Both allow you to use digital money without the participation of any payment providers or banks. But unlike Bitcoin, Ethereum can also create and deploy decentralized apps on its network.
The programmability of Ethereum gives an opportunity to create applications that use the blockchain to store data or control what your app can do. The result is a general-purpose blockchain that can be programmed for anything. Since there is no limit to what Ethereum can do, it allows for great innovation in the Ethereum network.
While Bitcoin is just a payment network, Ethereum is more like a market for financial services, games, social networks and other apps that respect your privacy and anonymity.
How to buy Ethereum
-Buy ETH via a Reputable Exchange
Various crypto exchanges such as Coinbase, Kraken, Binance, and OKX are offering to buy ETH with a bank card.
It should be mentioned that the largest exchanges are often centralized and may restrict trading activities and lock your funds anytime. So exchanges definitely are not a go-to for your long-term holdings.
-Buy Ethereum right from your Wallet
Many digital wallets today offer great functionality and have an in-built purchase option.
It allows you to avoid fees for transferring funds into your wallet from exchanges and any additional friction in the buy-store journey.
Also in many wallets you can find such features:
- Buy and sell option
- Asset statistics in Portfolio
- Full transaction history tabs
- Сustomizable commissions for sending coins
How to Store your ETH?
Essentially, you do not own your crypto until you hold it in your crypto wallet. So always store it in a reliable hardware or software wallet. As opposed to exchange wallets, non-custodial ones give you full ownership over your funds and private keys. Considering this, buying crypto right from the wallet may be a great option.
Conclusion
Lately, Ethereum has significantly dropped in price. That fact turns it into a good opportunity to invest while it’s low. Ethereum is the one of the most developed and adopted crypto in the world, which makes it a perfect asset to start your investing journey.
Become ETH Investor in three steps:
- Choose the service and the payment method
- Place an order
- Make sure the purchased Etherium is stored safely
On a final note, Ethereum and crypto in general is a highly volatile asset class. Always research and understand the asset that you’re investing in and the risks that you’re taking.
Follow us on Twitter: https://twitter.com/arctic_wallet
Download Arctic Wallet App: https://arcticwallet.io/
Let’s conquer Arctic together!
