Ethereum is a public open-sourced decentralized blockchain-based distributing platform and operating system. It is used largely by developers to create apps that run exactly as programmed with no downtime or interference. It is currently the #2 ranked cryptocurrency behind Bitcoin. Developed in 2013 in part by Vitalik Buterin, a Russian born programmer whose family moved to Canada looking for better opportunities.
In 2013 Buterin was a computer programmer involved with Bitcoin Magazine when he thought of the idea of Ethereum. He wanted to create a new platform that had its own scripting language. The development of the Ethereum software began in 2014 through a newly formed Swiss company entitled Ethereum Switzerland GmbH. Development was funded online by public investors buying the Ethereum value token (ether) with Bitcoins.
What Is Ether?
Ether is the cryptocurrency provided by Ethereum often described as “a fuel”. It is represented by the code ETH and used to pay for transactions on the Ethereum network. It is not intended to be used as a currency, shares or an asset but rather it is intended to be used to pay for computation across the network. The currency is essentially used for developers who intend to build apps on the Ethereum network or users who want to interact with smart contracts on the Ethereum blockchain. The validity of each ether is provided by a blockchain. The total supply of ether was determined by the donations gathered by pre-sales in 2014. The pre-sale resulted in:
- 60 million ether created.
- 12 million ether created for the development fund.
- 5 ethers are created for every block to the miner (about every 15 seconds)
- 2-3 ethers are sent to miners who were able to find a solution, but their block wasn’t included.
What Is A Blockchain?
The blockchain was originally created by Satoshi Nakamoto for the Bitcoin platform. The blockchain is a list of records or blocks that record transactions and is resistant to modification. The blockchain is essentially an online ledger that records transactions efficiently in a verifiable and permanent way. Blockchains are usually managed by a peer-to-peer network following the procedure for validating new blocks. Once recorded on the network, the data contained in the blocks cannot be changed without alteration of all subsequent blocks, which requires the involvement of the network majority.
What Is Ethereum Gas?
Gas is essentially the price for running a transaction or contract on the Ethereum network. Originators can set the price of gas and miners can accept or reject it. Miners can increase or decrease the use of gas depending on its needs.
What Is An Ethereum Wallet?
An Ethereum wallet is the way that users store their vital ether information. Considered by developers to be a gateway to decentralized applications on the network. It allows users to hold or secure ether or other assets built on the network.
How Do You Mine Ether?
Ethereum’s network is kept in operation by computers across the world. An Ethereum reward is given to the computer that creates the latest block in the blockchain. Approximately every 15 seconds a new block is added to the blockchain. New blocks contain transactions processed by the network and the computer that added the block is then rewarded 3 ether for their contribution. Rewards are giving to the computational power of each machine. This process is known as mining Ethereum in the cryptocurrency world.
Is The Supply Of Ether Unlimited?
No, as of now issuance is capped out at 18 million ether a year and relative inflation is decreased every year. The current rate is expected to be changed sometime in 2018 or 2019 when Ethereum is expected to change from a “proof of work” system to a new algorithm. The new algorithm in development is entitled Casper and is expected to be more efficient and require less mining. The exact issuance and function of the algorithm is still unknown, but the current maximum is considered a celling and the new issuance under Casper is expected to be much less. The new issuance method will be a decentralized smart contract that will not give privileged treatment to any group.
Can You Use Bitcoin On The Ethereum Platform?
Yes, Ethereum is based off Bitcoin technology and currency so they are very similar in nature. Ether is intended to be used as “crypto fuel” and to pay for computation but since it has a market value it can be used for other purchases. There are several ways you can use Bitcoin on the Ethereum network. You can trade Bitcoin for ether. There are several companies that make exchanging cryptocurrencies as easy as possible. It can also be used as a pegged derivative, an Ethereum based currency whose worth is pegged to the market price of Bitcoin.
Why Would I Need Ethereum?
Many users pay for transactions online whenever ether is accepted. Ethereum and other cryptocurrencies are often used because they can make quick and instant payments, they potentially pose no risk of fraud, they provide anonymity, no risk of identity theft, global currency, divisibility, or often users use it as an investment. While ether is not generally as accepted as Bitcoin it is making strides and expected to be just as accepted in the coming years. Most companies and users who accept ether now are generally investing in the company.
One of the best benefits of using ether comes from online gambling sites, most of the big sites now accept ETH for payments and withdrawals. When using a decentralized currency, transactions are instantaneous and usually hold no fees. Ethereum and other cryptocurrency platforms are the fastest and safest way to transfer funds online. Our guide to Ethereum gambling sites is a great resource for players looking to spend some ether with Ethereum online casinos or Ethereum poker sites.
What Is Next For Ethereum?
Ethereum still has some growing to do but they are already experiencing some great returns. Merchants are starting to implement Ethereum into their network and one day it is expected to be widely accepted. Today many merchants are backing Ethereum and are either accepting or preparing to accept the cryptocurrency on a large scale. Our guide to What Can Ethereum Be Used For is a great introduction to the many uses of the platform, but the current top leading companies that are backing Ethereum are:
- Samsung SDS
- Brave Browser
- Swiss Banks
Is There An Ethereum Bubble?
Many analysists believe that Bitcoin and other cryptocurrencies are in a bubble and a lot of people will likely lose a lot of money when it goes bust. The truth is no one really knows but based on history it is highly likely. Yes, it is a volatile market with lack of regulation, but the benefits cryptocurrencies provide are highly desired by consumers. Ethereum is not at the same level of acceptance as Bitcoin so for now, investors don’t have much to worry about.