What Is Ethereum?
If you’ve been following cryptocurrency trends, you must have come across Ethereum. This is one of the biggest blockchain technologies in the world and a subject of much hype. Lately, Ethereum has been rising in popularity with increased interest from people of all circles. It is praised as the new revolution of the internet that’s taking over the world. So, what’s so unique about Ethereum that has driven its popularity? If you want to know what is Ethereum and whether you should invest, here is a high-level analysis of its origin and how it compares with other cryptocurrencies.
Ethereum is a blockchain network that allows users to build several decentralized applications. They debuted it in 2015 as an open software platform where users can create and share business, financial services, and entertainment applications. In short, this is a programmable blockchain based on peer-to-peer network protocol.
It works via a public blockchain network as a blockchain platform with its cryptocurrency. Like any cryptocurrency, Ethereum is based on decentralized blockchain technology. However, instead of allowing users to use a few pre-defined operations, they can run any code they want. Users on the network can create, monetize, publish and use applications and games with low risks.
On the Ethereum network, you use Ether cryptocurrency as payment to trade. For example, users can use cryptocurrency to buy and sell goods. Recently, the Ether crypto has seen rapid gains in prices as a digital currency in financial transactions. It has also raised eyebrows as a store of value.
Furthermore, Ethereum has its unique programming language called Solidity. All decentralized applications on the network are known as dapps. Developers can create and publish smart contracts and applications without the risk of downtime, fraud, or third-party interference. The Ethereum blockchain stores more than transaction records for the ether currency.
Bitcoin vs. Ethereum
There are several similarities between Bitcoin and Ethereum. They use a decentralized and open-source blockchain with smart contract functionality. Both Ethereum and Bitcoin are creators of virtual currencies.
When measured in terms of stock value and market capitalization, Ethereum is ranked second as a cryptocurrency behind Bitcoin. Its market share has increased amid a rush of interest in the crypto space. It hit new heights in April 2021.
However, while Bitcoin and Ethereum are the two biggest cryptocurrencies by market capitalization, they are different applications. The technologies were built for various reasons and encompass varying internal dynamics.
For example, Ethereum runs a virtual machine called Ethereum Virtual Machine (EVM). This is a supercomputer that combines all the computing power of nodes in the network. It runs the smart contracts on the blockchain while charging a small transaction fee for the computation power.
Therefore, it is intended to be more than just a medium of exchange or store of value. For example, it is considered a decentralized computing network developed on blockchain technology. You can use the Ethereum network to store data and run decentralized applications. Also, developers on Ethereum can raise funds for their application, which is not possible with Bitcoin.
Ethereum’s meaning differs from Bitcoin because it can build computations as part of the mining process. While it is a blockchain network like Bitcoin, it offers several other functions outside the digital currency. The cost of the transaction between Bitcoin and Ethereum is also different. For example, the cost of transactions on Ethereum depends on bandwidth usage and storage requirements. On Bitcoin, the blockchain limits the purchases.
Should you buy Ethereum?
Ethereum has the potential to provide better profits in the immediate future. While it has a smaller market cap and low global recognition, the current hot trends in the crypto space are built on top of Ethereum.
This can bring about a significant rise in the price of Ethereum.
There are several benefits of trading with Ethereum. First things first, the blockchain network is set on consistent roadmaps that have inspired confidence in investors. The decentralized structure of Ethernet is also a significant advantage that provides users with more privacy and security.
At the same time, Ethereum doesn’t rely on middlemen to service transactions thanks to smart contract technology. This means users can connect without depending on any company to provide service coordination. It helps avoid any censorship or unfair transaction fees.
The currency allows you to trade on both rising and falling prices. Its technology has leveraged trading, which means you only deposit a proportion of the entire trade value to open a position. All transactions on Ethereum are safe from fraud, theft, or censorship. You also don’t need to open an exchange account or wallet to trade on Ethereum.
However, Ethereum’s price is affected by several factors, including regulation, availability, and the media. For example, negative media coverage of the network around security and longevity can affect its price. The change in regulations by both the government and central banks could also affect its value.
How to buy Ethereum
If you have bought cryptocurrency before, you will not struggle to know what is Ethereum. There are several ways to trade CFDs on Ethereum. When you buy the Ethereum tokens on an exchange, you will see the price quoted in a traditional currency. This is the amount of cash needed to buy Ether. If you have the tokens and the price increase, you can sell for a profit and vice versa.
When trading on the CMC market, users can transact via a CFD account. The account allows you to speculate price movements without owning the cryptocurrency. Ensure you have a secure password to safeguard your account.
Once you have the account, you will need to deposit money. You then need to fund your account using a direct bank transfer. However, you can also select other exchanges that allow you to buy cryptocurrencies using a credit card. Users can also keep their coins in a cryptocurrency wallet to prevent theft and fraud.
Before trading with Ethereum, you must open a crypto exchange account allowing you access to cryptocurrency trading. When buying Ethereum, you are simply converting your US Dollars into the ether. Therefore, decide how much Ethereum you want to buy depending on the prices. Unlike Bitcoin, Ethereum doesn’t limit the number of times you can create the Ether.
There are many places you can buy Ethereum, such as Coinbase, Binance, and eToro. Since Ethereum is popular, almost all cryptocurrency exchanges will sell it. Find an exchange that accepts fiat money such as US Dollars and one that meets your needs.
This guide can help you understand what is Ethereum. While it is not a cryptocurrency, it works on the same blockchain technology as other cryptocurrencies. It operates as a decentralized network whose smart contract functionality presents a multitude of opportunities for investors. The technology makes money when users pay fees for using the platform. However, it was not created to support cryptocurrency, but to provide an in-house currency for applications built on the Ethereum blockchain. Therefore, it has broader ambitions as a platform for all applications that can store information. If you want to invest in the network, sign up for a trading account.