Ethereum is the second-largest cryptocurrency in the world. It is a virtual currency solidified to deal in a smart world. Launched in 2015, Ethereum’s white paper was submitted by Vitalik Buterin in 2013. Buterin is Russia born Canadian technopreneur, who worked for Bitcoin magazine in till 2011. He was the co-founder of this magazine and a programmer as well. His main aim was to develop decentralized applications or DApps.
In January 2014, Miami hosted the North American Bitcoin conference and Ethereum was introduced there. Gavin Wood, Anthony Di Lorio and Charles Hoskinson stayed with Vitalik Buterin for the development of Ethereum.
The 41-year-old Gavin Wood, who took up the technical work side for the introduction of Ethereum as a blockchain, became the co-founder of Ethereum and later on created cryptocurrencies like Polkadot and Kusama.
Ethereum is completely decentralized and its transactions are recorded and verified. Ethereum holds second place in terms of value in the cryptocurrency world after Bitcoin and holds a behemoth token status.
The users pay gas fees to use the DApps. The amount of fees depends on the trade made by the user. However, the latest London Hard Fork update has reduced the circulation of digital currency, thanks to its deflationary effect. Ethereum is inadequate digital money that is used on the internet. Ethereum is completely different from conventional money. Ethereum user holds their wallet themselves and no third party is involved in it. This virtual money in the wallet is secured by cryptography. It also protects the money and keeps an eagle eye on every transaction. The user can send Ethereum to any person or any place without any intermediary and the transactions are peer-to-peer encrypted. The decentralized property of Ethereum gives no government or institute the right to control it. Transaction in Ethereum can be easily done using the internet and the user only needs a wallet to send or receive ETH. The user doesn’t need to buy 1 Ethereum. It can also be bought in a fraction in a small infraction. ETH or Ether is the native digital currency of Ethereum apps.
Distinct integrity of ETH:
- ETH fuels and secures Ethereum
- ETH is the lifeblood of Ethereum
- Miners are reward with ETH for their work
- ETH Stacking adds to the security
- ETH can be used as collateral to generate different cryptocurrencies
- ETH is now widely accepted and used to mine NTF’s
- Etherum’s financial system is underpinned by ETH
- ETH is widely used for lending, borrowing and earning purposes.
Uses of ETH
- ETH can be shaped by the developers in countless ways
- Streaming on ETH is very susceptible
- ETH tokens can be easily swapped with any other tokens
- ETH is making NFTs mining popular. ETH based crypto is much in demand
- Interest can be easily earned on Eth or Ethereum based tokens
Mining of Ethereum
Ethereum works on a blockchain network like other cryptocurrencies. The miners work on supercomputers to solve extremely complicated mathematical equations. Once the equation is solved, the transaction gets completed and a new block will be added to the blockchain and miners will be rewarded with the Ether tokens. The application can be built on the blockchain by users to store and transfer data.
Difference between Ethereum and Ether:
Ether is used as a digital or virtual currency for investment whereas Ethereum is a network of blockchain where Ether is exchanged. In other words, Ethereum is the network and Ether (ETH) is its native token. The coding is done on the Ethereum blockchain by miners and Ether (ETH) is delivered as a reward to miners or the crypto users.
Advantages of Ethereum
- Ethereum network is very large, wide and used by billion of users for about a decade now.
- Ethereum stands among the largest in the global community and ecosystem in the crypto world.
- The range of a function is wider. It is useful in the execution of smart contracts.
- Though Ethereum is a digital currency it is also used to complete other financial transactions.
- The developers or miners of Ethereum are always looking forward to the improvement of the network.
- Ethereum has gained wide popularity among the blockchain network.
- Ethereum doesn’t involve any intermediate, governing bodies or financial institutions because of its decentralized network.
- Ethereum can be used in many sectors for making payments.
- Many big enterprises are attracted by Ethereum because third parties become repetitious.
- Ether is not restrained like other cryptocurrencies and has practical utility.
Drawbacks/Limitations of Ethereum
- The popularity of Ethereum has boosted among users which have led to high transaction fees which in terms of crypto is called gas fees.
- There is a limitation of releasing Ethereum per year and this is a major drawback for the user to deal with.
- The programming language used to generate Ethereum is very complicated and it is very difficult for beginners to learn.
- Investing in Ethereum is risky like other cryptocurrencies fluctuations in price.
- Ether lacks deficiency for many of the traders.
- Though investment in Ethereum is risky with lots of competitors it is also true that Ethereum has revolutionized the crypto market worldwide.
How to invest in Ethereum:
To buy Ethereum or ETH from a crypto exchange, one needs a digital wallet, which connected to the particular cryptocurrency exchange. It doesn’t trade on any stock market. One needs to convert Ethereum into local currency before buying it. Also, a user can buy a smaller piece or fraction of the Ethereum based on the amount he intends to invest. Ether is a cryptocurrency and it cannot be treated as a share or stock by investors. The only format to buy Ether is to exchange the local currency of a particular country to buy Ether tokens. There are no payouts or any form of a dividend to be a receiver in future. The only profit is when there will be violation growth in the price then we get more pay for the token which we bought earlier.
If a person does not have knowledge about digital wallets to buy Ether and is interested in investment then it can also be done through various ETF products available in the crypto spectrum.
How to sell Ethereum:
Selling Ethereum is a simplified process and the contrary of buying. To sell the Ethereum we have to place an order of sell in exchange in which we purchased the coin or token. It is not mandatory to receive cash after selling Ethereum. The cryptocurrency exchange helps to sell Ethereum and after selling the user can also buy different cryptocurrency or altcoins or simply convert it into local currency.
For instance, one can sell Ethereum on any exchange and in return can buy other cryptocurrencies like Bitcoin, Litecoin, Tether and more.
How to transfer and store Ethereum:
Once Ethereum is bought investment is done, it is better to transfer the token into our digital wallet from the exchange. Digital wallets can be easily managed and controlled by the user and there is the least chance for the hacking of the account. Storing coins will help to earn a profit when the price of coins increases.
Investing in Ethereum is risky like any other cryptocurrency, but it could probably be lucrative. Ethereum is a building block like Bitcoin. There can be splits in Ethereum which we have seen in other cryptocurrencies like Bitcoin and Bitcoin Cash.
Disclaimer: Angel One Limited does not endorse investment and trade in cryptocurrencies. This article is only for education and information purposes. Discuss with your investment advisor before making such risky calls.