What is Ethereum?

Ethereum is a type of cryptocurrency that runs on the blockchain technology. It features its own currency, Ether, which works as the platform for other cryptocurrencies and also has smart contracts.

The Ethereum project is an open-source, public, blockchain-based software platform that provides Turing-complete smart contract functionality. Its native token is the second largest digital currency by market capitalization after Bitcoin.

As of December 2021 there are over 900k Ethereum wallets with $400 billion USD in total market capitalization.

Ethereum Live Price Chart

What is Ethereum’s Blockchain?

Ethereum uses a public ledger system called “blockchain” in order to store all transactions or data within it.

When data goes through this system, no one can change anything about them without changing every copy at once (known as being immutable).

This means there are records available regarding where ETH have been transferred from and vice versa – an important security feature when managing digital currencies like Ethereum!

There are benefits to using a blockchain such as there is no centralized data storage, meaning any corrupt party will not be able to tamper with the information.

Who are the creators?

Ethereum has a total of eight co-founders, most notable and recently recognized as the world’s youngest billionaire, Vitalik Buterin has played a key role in shaping the direction of the token and project.

Ethereum was developed in 2013 by Vitalik Buterin and introduced at an event called “Bitcoin conference” which took place in Miami, Florida. The developers were looking to build a platform for decentralized applications (DAPPs) or smart contracts with Ether as their currency.

Outside Vitalik, one of the only remaining leaders who helped launch Ethereum, we see other co-founders step away to focus on their own projects and improve in areas where they feel ETH will fall behind.

Someone closely followed people in this space, Charles Hoskinson, who played a principal role in organizing the legal framework of the Swiss-based Ethereum Foundation is now the CEO of IOHK, the technology firm behind ADA, the Cardano crypto project.

What is the current status?

Ether has a current value of $400 billion which makes it second to bitcoin in terms of market capitalization. Ethereum is also being used by many companies such as Microsoft (for example-for its Azure service).

There are some major upgrades attempting to be done to improve efficiency, speed, and cost but not everyone is convinced these changes will solve the round of battles it’s about to face, especially as the bull market continues to surge and demand for ETH increases.

Proof of work

Proof of work is the most common consensus mechanism in blockchain technology. It rewards people who are supplying computational power to solve complex math problems and verify transactions on the network.

This process is called mining, where a miner receives an incentive for performing computations before any other miners can compete for solving it first.

The goal is to ensure that one person or group cannot control more than half of all processing capacity- as this would give them the ability to reverse transactions they have sent out themselves (aka double spending).

After a block is mined, every miner in the network tries to mine another block.

This means that miners are always trying to earn more Ethereum by solving complex math problems and verifying transactions on the network.

Gas fees

Transaction fees are money that you pay when you send Ethereum from your account. Miners will mine the transactions faster if they get these fees.

This means that people who send transactions with higher gas fees have more of an incentive for miners to solve them faster, as they are paying more money per second.

The average gas fee is getting extraordinarily pricey as we reach new all time highs in the bullet market. Fees fluctuate from time-to-time depending on Ethereum prices and mining difficulty in solving cryptographic problems which creates new blocks.

Just recently I attempted to complete an Ethereum transaction and there was over $120 in GAS fees. This does not seem sustainable or logical to use to send money when there are plenty of other coins that can do it for a fraction of the cost.

How to buy Ethereum

Ethereum can be purchased on many different exchanges, and it is recommended to do your research before making a purchase.

Since Ethereum is the number two most recognized coin by trading volume, it’s safe to say that every crypto broker and exchange will offer an Ethereum (ETH) trading pair.

See the top crypto exchanges to buy Ethereum

How to store Ethereum

Ethereum can be stored in many different wallets, the most recommended being a hardware wallet.

If you don’t get a hardware wallet, there are plenty of secure software wallets but you need to be extra cautious about using it.

No matter what you do, never leave your coins on an exchange. You risk them being hacked or the exchange running off with your coins.

You should research what type of cryptocurrency wallet you want to store your tokens before making any purchases.

Our favorite choice for storing Ethereum is the Ledger Nano wallet.

Bitcoin vs. Ethereum

Ethereum is different from Bitcoin in that it can be used to create decentralized applications, smart contracts and token creation. It also has a much faster block time than bitcoin, at around 15 seconds vs ~ten minutes for bitcoin.

As of this writing (May 2021), Ethereum’s market cap is about $400 billion US dollars; while bitcoins’ market cap is over $1 trillion USD.

Ethereum’s transactions per second are currently limited by the number of miners on the network – but as with bandwidth or storage capacity, more mining power will increase throughput limits significantly.

Wrapping up

Ethereum is currently one of the most successful cryptocurrencies to date and has a very healthy community that will continue building on top of Ethereum’s potential for years to come, but it faces many challenges as well.

I think Ethereum can be used as just a currency or store of value like any other cryptocurrency out there today, but not much more can be said at this point in time given its scaling issues and high fees when using it for transactions.

At the end of the day, if a faster, more efficient and less expensive option becomes available and supports smart contracts along with all the other bells and whistles, it’s not hard to see Ethereum getting passed up.