What is Ethereum cryptocurrency?

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The appearance of Bitcoin has changed people’s perceptions of money transfers. The appearance of this currency has prompted many developers to create something similar. To date, Ethereum is in the second place in the rating after Bitcoin and attracts more and more users. Among all cryptocurrencies, Ethereum deserves the most attention. This system does not work according to the usual rules for us. It does not come under the control of banks, states and other regulatory bodies. The guarantors are the participants who support the life of the system.

token Ethereum

What is Ethereum: general information and the history of creation

Ethereum is Bitcoin’s fork, it is a platform with which you can create decentralized online services based on blockchain and smart contracts. As a result, you get a virtual system and all participants can use it on an equal basis.

The author of the idea is Vitalik Buterin, a Canadian programmer with Russian roots. He was interested in cryptocurrency in 2011. This year he created Bitcoin Magazine. It became the first major print publication devoted to the subject of cryptocurrencies.

The idea to create Ethereum appeared in 2013. At the same time, an article appeared in the Bitcoin Magazine. Gavin Wood is also a creator of Ethereum together with Vitalik Buterin. In the so-called “yellow book” he described Ethereum in more detail. Together with the first participants of the system, was launched fundraising with the help of crowdfunding. Developers were able to collect $18 million in Bitcoin, but in return they must provide 60 million Ethereum coins.

After the startup was able to attract large investments, big companies were interested in it, namely: Microsoft, IBM, Acronis.

What is the uniqueness of Ethereum?

After the appearance of Bitcoin, it remained for a long time the only cryptocurrency that has a high growth potential. The bulk of the analogs did not attract really serious attention from the public. But the Ethereum cryptocurrency has a unique difference, which is the use of smart contracts.

Each transaction of the system is carried out using a computer program. It checks the terms of the transaction and the fulfillment of obligations between the sender and the recipient. Since the compliance with all the points is monitored not by people but by the system, this ensures honesty and impartiality. Thus, a smart contract cannot be circumvented or canceled.

Smart contracts are also laid in Bitcoin blockchain, but their possibilities were deliberately limited by the creator of cryptocurrency, Satoshi Nakamoto. The programming language Script is used in the basis. It does not have access to blockchain or transactions, so it cannot check all the terms of the transaction. Therefore, smart contracts in the Bitcoin system are able to cope with only the simplest tasks.

The Ethereum platform uses programming code similar to JavaScript. A contract is deemed to be completed after it has received notification from another user or another smart contract. The computer program sends money independently, after the conditions are met. It can also work with the database that accompanies each transaction. After the end of the transaction, the computational result is written to the blockchain. The sender will be able to immediately notice it if he will monitor the smart contract.

Ethereum: main terms

If the user has not previously been familiar with cryptocurrencies, then it is rather difficult to understand the basic principles of the operation of such a financial system at once. If you plan to continue to seriously explore cryptocurrencies, trade on the exchange or start a mine, then you definitely need to study the basic definitions.

Blockchain

Blockchain is a database in cryptocurrencies. It stores all information about the performed transactions. The data is stored as a chain of blocks, hence the name of storage was formed. The term “block” often means the following concepts:

  • the technology on which cryptocurrencies are based;
  • the protocol;
  • peer-to-peer network, where all participants are equal in rights;
  • decentralization of the register.

 

Ether (ETH) – currency that is used for transactions.

Smart contracts

Smart contracts are protocols (mathematical algorithms), used to verify obligations between members of the Ethereum system. The user will not receive the transfer of the asset until he has fulfilled the conditions prescribed in the contract. Thus, the fulfillment of obligations is ensured without regulatory and state bodies.

ethereum smart contracts

Smart contracts can be used in different financial products:

  • partnership programs;
  • insurance;
  • periodic payments;
  • trade.

There is a simple example of how a smart contract can be used right now – two people want to play a sweepstake and put on the same match. Their bets are saved in the blockchain. After the match ends, the smart contract checks the result and transfers the winnings to the winner.

In the future, such contracts will easily control the execution of more complex obligations. For example, a person rents a house, but did not have time to pay for rent in time. The computer program blocks the lock in the apartment and the tenant cannot open it. The prospects for development are really huge.

More than 95% of ICO (Initial Coin Offering) are organized on Ethereum smart contracts, the rest with the use of Waves. Clearly, Ethereum is the leader for the organization of the ICO.

Where to buy and sell Ethereum?

Ethereum has become very popular in a short period of time. Today it is freely sold and bought on exchanges and in exchangers that specialize in cryptocurrencies.

We recommend to exchange on the following platforms:

It is convenient to follow news and quotes at cryptocurrency exchanges. In addition, sites have online chat rooms. Miners and traders can quickly share information and share their successes on the market. The withdrawal of funds is available immediately to several wallets.

We recommend storing Ethereum in the official MyEtherWallet.

When creating a wallet, 2 keys are created.
  • Public key – the wallet address that others can use to send you coins.
  • Private key – allows you to move the Ether, which is associated with the address of your wallet in the blockchain. Private keys are known only to the owner.

 

Ethereum Mining: how to start mining the cryptocurrency

Buy a few coins – it is not the only way to get Ethereum. If you have available funds for investments, you can invest them in creating a “farm”, special equipment that is used to cryptocurrency mining. If in the case of Bitcoin for the issue of new coins you need ASIC, special processors, then for Ethereum you need a good graphics card, and better several at once.

Most often for Ethereum mining use the following models of graphics cards:

  • ATI Radeon R9-280x;
  • Radeon R9 290;
  • AMD Radeon HD 7970;
  • Radeon HD 7950.

 

And here beginners will face the first problem. The above mentioned graphics cards have already been removed from production, so it’s very difficult to get them on the market. You can find an alternative on the CryptoCompare site. Of the relatively new graphics cards, take a look at the Radeon R9 390. It pays off quite quickly.

Depending on how many models you have selected for Ethereum mining, you will have to select other equipment. It will require a motherboard, a cooler and so on. If you have the experience of computers assembly, then you should not have problems with setting up the farm.

After we have assembled the farm, you can go to the pool selection. For those who do not know what it is, in simple terms it is a platform on which miners are coming together to make the overall power of the network higher. Due to this, the probability of getting rewards increases.

For stable work, you need to take care of a quality Internet connection, because cryptocurrency is mined online. After the miner receives a reward in the form of ETH, he does not need immediately sell it on the exchange. The profitability will largely depend on the rate at which Ethereum will be sold. Therefore, miners have to monitor quotes and participate in exchange trades.

Ethereum vs Ethereum classic

Once you go to a large exchange, in addition to the usual Ethereum, you can find Ethereum classic. Beginners such a phenomenon can be misleading, since the exchange rate of this currency is very different.

On the basis of the Ethereum worked The DAO code, a platform for autonomous investment management. It had an error that was used by hackers in June 2016. Their attack resulted in the fact that the attackers were able to translate about 1/3 of the entire part of Ethereum to ChildDAO. Control of this account had only the attacking side.

According to the rules of Ethereum, the amount cannot be refunded. However, the community raised this issue for discussion. Despite the lack of decentralization, a hard fork passed on July 20, 2016, and as a result the chain of the Ethereum block separated and stolen Ethereum were returned. As some members of the system were outraged by this change, which was contrary to the rules, the Ethereum Classic was appeared. The new cryptocurrency continues to work as the project of The DAO.

Ethereum vs Bitcoin

  • Bitcoin and Ethereum are mining on the cryptocurrency exchanges;
  • to store key codes that provide possession, special wallet are needed;
  • cryptocurrencies trading, including bitcoin and ethereum occurs on the platforms of cryptocurrency exchanges;
  • the value of both cryptocurrencies depends largely on demand and supply, that is, it is subject to leaps in connection with industry events.

Features of the Ethereum

Smart contracts can radically change the relationship of the parties in the field of law and finance. With the development of the “Internet of things”, when almost all household devices will be connected to a common network, Ethereum can enter into the lives of ordinary users through smart contracts.

Among its features are:
  • high degree of user protection through authorization through cryptographic signatures, provided that it stores them on recording devices that are not connected to the network, for example, usual flash drives;
  • resistance to DDoS attacks;
  • the history of all transactions is stored in the blockchain.

 

Capitalization of the Ethereum is constantly growing, because investors invest in coins (tokens) in new ICOs. The analysis shows that the Ethereum course will continue to grow. In 2018, this cryptocurrency can grow to several thousand dollars. The choice is yours – you can buy Ethereum or use it to invest in new ICO.

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