Curious to learn about one of the most popular and fastest-growing cryptocurrencies today?
In this guide, we’ll answer important questions about Ethereum and help you determine if this is the best currency for you.
What Is Ethereum?
The currency is a decentralized digital currency that uses a blockchain network. It uses the cryptocurrency Ether (ETH) for peer-to-peer transactions.
How Does Ethereum Work?
This platform was created to help developers publish smart contracts or DAPPs without interference from a third party. This is made possible by the use of blockchain technology.
Ethereum Blockchain
Like bitcoin, this currency uses a blockchain system to encrypt transactions. The blockchain used for this system presents one of the most prominent examples of how ‘forking’ works.
Ethereum Mining
Mining this cryptocurrency uses a proof-of-work methodology. This means that when a node mines a block of transactions, all future transactions involving that block are identifiable. They are stamped with the proof of work the original node performed (i.e., solving the mathematical problem necessary for mining).
Ethereum 2.0
ETH2 will change the way the network operates from proof-of-work to proof-of-stake.
A major problem with cryptocurrency mining is its carbon footprint. Ethereum 2.0 replaces the competition of proof-of-work transactions with an algorithm that chooses successful nodes based on:
- How many coins have been staked in the mining process
- How long the stake has been active
This will make the Ethereum network more sustainable.
EIP-1559
In typical blockchain transactions, transaction fees pass to the block miner and are determined by network activity (i.e., in higher-activity periods, transaction fees are higher).
However, with the EIP-1559 upgrade, base tips and fees would be used in a hybrid system that incentivizes transactions regardless of the base transaction fee at the time.
A fee would be the base cost of a transaction as determined by the algorithm, while a tip would be what you paid to increase the speed of a transaction. This could reduce net transaction fees in the same way as tipping reduces food costs in restaurants.
How to Buy Ethereum
If you wish to buy this currency, you should find a trusted cryptocurrency exchange. See our guide to crypto exchanges for more information.
History of Ethereum
Vitalik Buterin first proposed this currency in 2013. Its development was crowdfunded through 2014, and the network went live in July 2015.
Who is Vitalik Buterin?
Vitalik Buterin is a Russian-Canadian programmer who first conceptualized ETH in 2013. He was previously involved in publishing Bitcoin Magazine.
Ethereum Price and Volatility
This currency is volatile compared to Bitcoin (the most stable cryptocurrency) but is far less volatile than many altcoins.
Summary
With advances such as the 2.0 version and EIP-1559, this cryptocurrency is one of the most interesting options available to investors today. Its commitment to solving the carbon footprint of bitcoin by transferring to a proof-of-stake system is especially noteworthy.
Ethereum FAQ
Is Ethereum legit?
Yes, the currency is protected by blockchain encryption and has many active nodes.
Is Ethereum better than Bitcoin?
This depends on your perspective. ETH is solving some environmental questions raised by Bitcoin through its proposed adoption of a proof-of-stake system.
What is Ether currency?
As a cryptocurrency, ether (ETH) is the currency used by adopters.
How many Ethereum tokens are there?
The annual limit of Ether tokens released is 18 million per year.
How high will Ethereum go?
Nobody can tell how high a cryptocurrency will rise relative to fiat currency. However, ETH is considered an exciting prospect by many investors.
How to start mining Ethereum?
To mine any currency, you need a specialized computer.
When was Ethereum created?
This currency was conceived in 2013 by Vitalik Buterin. The network went live in 2015.
What is Ethereum gas?
This describes the price of a transaction/contract on the ETH blockchain. Essentially, if you can pay the “gas” fee, you can afford a transaction.
