The idea of what is happening in the financial world has changed completely after the appearance of Bitcoin.
Now money transfers have moved to an entirely different level, and the success of the first cryptocurrency marked the beginning of the emergence of some coins that dream to achieve the same success as the pioneer.
But to create something as popular failed up to this time. The Ethereum cryptocurrency can be called an exception. Of course, it is far from Bitcoin in price, but it is quite young, and in 2017 it deserved attention, as it has significantly grown in price.
Ethereum (Ether) is a cryptocurrency that ranks second after Bitcoin by capitalization. It is a coin, fuel for the network and a means of limiting unscrupulous users, serves as a platform for creating decentralized applications, based on smart contracts. Ethereum is of great interest to investors and developers.
A Little History of the Ethereum Development
The first description of Ethereum was presented in 2013 by Vitalik Buterin, who was at that time one of the founders and editor-in-chief of Bitcoin Magazine.
He is the principal author of the platform and the specialist, who came up with its concept. For the idea of Ethereum, the young programmer received the prestigious World Technology Award in 2014, as well as a grant for its development of $100,000 under the Thiel Fellowship program.
The team of developers also includes Buterin’s colleagues in joint activities in various blockchain projects and the magazine: Mihai Alisi, co-founder of Bitcoin Magazine; Anthony di Iorio, entrepreneur; Amir Chetrit, one of the creators of Colored Coins; Charles Hoskinson, mathematician, and popularizer of the idea of cryptocurrencies.
Programmer Gavin Wood performed the main share of work on Ethereum code. He also prepared a technical description of The Ethereum virtual machine (YellowPaper) in April 2014, which tracks the execution of smart contracts and the status of wallets.
ICO started in July 2014, and as a result of the procedure more than 18 million dollars were received for the project development.
The funds came under the management of the Ethereum non-profit Fund, which is geographically located in Switzerland. The network was launched on 30.07.2015.
In the early stages of development (version Frontier and Homestead), the protection of the system is carried out through mining.
With the development of the platform, a full transition to the Proof-of-Stake (“share confirmation”) technology is envisaged.
Ether (ETH) cryptocurrency is a necessary element for the operation of the decentralized Ethereum platform; it’s a kind of fuel.
It is an incentive for the creation of high-quality software products and the key to the health of the network. The coin is often called the second generation cryptocurrency.
It cannot be considered an analog of Fiat money, but it rather serves as a way to account for the use of network resources. Its functions also include the restriction of unscrupulous users and developers. Example: the more complex tasks intended to be executed, the more “fuel” (ether) the user will have to spend.
The functionality of the coin, therefore, includes the following options:
- means for payment;
- means for registration of transactions for the exchange of crypto-assets and other resources through the smart contracts;
- fuel for the implementation of smart contracts in a peer-to-peer network.
The Ethereum platform is based on the blockchain, it has the open code and is intended for application developers (Decentralized applications) based on smart contracts, which is the key to its continuous improvement.
It significantly expands the capabilities of the protocol and removes the limitations of Bitcoin’s concept.
This system also exists as an environment, where people can make transactions (single-level transactions) without having to trust each other or the third party.
The Capabilities of Ethereum Mining
To date, the Ethereum coins can be mined by using the powerful computers or mining farms.
The most critical parameters of the videocard are:
- amount of memory (from 3-4 GB);
- speed (standard DDR 5);
- bus capacity (256);
- presence of active cooling system;
- possibility of overclocking.
The set of characteristics of an appropriately selected graphics card determines its performance in mining, namely hashrate (the number of hashes found per unit of time). This parameter is expressed in MH/s (1 million hashes per second) in Ether extraction technology.
A more affordable and profitable way to obtain coins is cloud mining, which consists of buying a contract from a specialized data center.
This option saves the user from worries about paying bills for electricity and maintenance of computer equipment but carries with it specific risks.
The loss of investment funds may be due to the seller’s dishonesty or an unexpected hacker attack. It is important to remember that every day the complexity of Ether mining increases and the importance of this method of mining cryptocurrency in the Ethereum network is continuously reduced.
The Types of Ethereum Wallets — Where to Store Ethereum?
It is important to know that the loss of your private key is much more severe than the misuse of the password to it – this can lead to the irretrievable disappearance of all your Ether. Remember that!
There are a large number of variants of Ethereum wallets that are used to store cryptocurrency today. These include:
- web wallets (browser-based, online);
- desktop walls;
- hardware wallets;
- paper wallets.
The choice of a particular option depends entirely on your personal preferences, concerning convenience and security.
In this case, usually, these two characteristics contradict each other, as the more convenient, the worse the security.
The Advantages and Disadvantages of Ethereum
Let’s consider the main advantages and disadvantages of Ethereum cryptocurrency in comparison with Bitcoin and other cryptocurrencies.
The Benefits of Ethereum:
- Ethereum has a well-known creator, who announces all essential innovations, so the development of this platform and cryptocurrency is more predictable.
- The Ethereum has no restriction on the issue of coins as in Bitcoin. However, the unlimited supply does not allow it to quickly rise in price, as many other cryptocurrencies demonstrate.
- One block in the Ethereum blockchain is generated in 15 seconds, while in Bitcoin it takes 10 minutes.
- The Ethereum platform is more than just a cryptocurrency because it makes it possible to create the smart contracts.
- Immutability – “code is the law” is a kind of development motto, meaning the inability of developers to intervene in the program.
- Decentralized protection – applications are formed by the blockchain and cannot be corrected from the outside.
- No downtime – applications and systems, as well as smart contract execution, are available at any time without interruptions.
The Drawbacks of Ethereum:
Ethereum cryptocurrency is less popular than Bitcoin, with all the ensuing consequences:
- Bitcoin is considered to be the cryptocurrency gold for an investment asset, and it can be called more suitable than Ethereum.
- Ether, in comparison to Bitcoin, is much less popular as a means of payment: Bitcoin is accepted for payment by a lot of points and sites, and Ethereum is almost nowhere to be taken.
- As a speculative asset, Ethereum also loses to Bitcoin its fluctuations in the market, and hence the opportunities for earnings are not so significant (but for minimizing risks, this can be considered as an advantage).
ConclusionsSumming up all the above, we would like to emphasize once again that Ethereum cannot be considered as just a cryptocurrency, it is a robust platform that allows you to implement projects, based on smart contracts and blockchain technology.
On the one hand, this opens up the broad opportunities for the implementation of its cryptocurrency projects; on the other hand, it reduces the attractiveness of the Ether as an investment or speculative asset.
Therefore, the use of Ethereum cryptocurrency and its platform depends on the needs and preferences of everyone.
Now you have an initial idea of what kind of cryptocurrency the Ether is, for what it was created, where it is used, what advantages and disadvantages it has, where it can be obtained.
Of course, this is only introductory information, and if you are interested in this cryptocurrency, then you need to study it in more detail.
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