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What is Ethereum? All you need to know about ETH - Binaryx
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What is Ethereum? All you need to know about ETH

Ethereum is known as the P2P network without any external control. Essential components are ‘nodes.’ There are many users that monitor the system performance and validate all internal operations. ETH systems also propose to create smart contracts via Ethereum Virtual Machine (EVM). It also operates like a sandbox, which allows executing the untrusted programming code. EVM is isolated from the primary network and provides all instruments for creating smart contracts. Their implementation is backed by the internal token called ‘Ether.’

So, let’s analyze the Ether definition and its main features. 

Who created Ethereum

Ethereum network was launched in 2015 by Vitalik Buterin. The Canadian programmer of Russian descent became famous back in 2011. Then he became one of the founders and authors of the first print publication about blockchain and cryptocurrencies called ‘Bitcoin Magazine’. It’s the time of early recognition.

Buterin didn’t confine to publications, and at the end of 2013, he proposed a platform for creating decentralized applications. With this platform, it became possible to increase the Bitcoin network’s functionality by supporting the scripting language. 

However, the community didn’t support Vitalik’s idea, so he decided to launch his own cryptocurrency. The enthusiast gathered a team in a few months and organized an ICO. At that time, the revolutionizing startup received about $18.5 mln of funding.

Is it a cryptocurrency?

There are not only Ethereum coins but also a self-titled platform for creating dApps. It is effortless to access the system. You need to activate the Meta Mask browser extension.

There are also smart contracts that allow managing its resources. It’s a specific programming code written in the original Solidity language. The developer sets up a script based on the “if-then” principle. After that, blockchain nodes perform this program automatically and record the results of each transaction. They are stored on thousands of computers around the world.

This innovation allowed the creation of Ethereum-based decentralized applications that work without crashes or fraud. If one of the executing nodes stops the work, this won’t affect the app’s stability. The obtained data also remains unchanged. They are securely stored due to distribution among thousands of nodes, as well as the entire blockchain.

Access to Ethereum crypto blockchain resources is not provided free of charge. Instead, you need to pay a fixed amount of ETH as a commission. A final number of tokens depends on the complexity and is set by the user. The higher the execution price of a smart contract, the higher its priority and processing speed.

Is Ethereum like Bitcoin?

The most significant difference between Bitcoin and Ethereum is the purpose of the two coins. Bitcoin was created as a replacement for real money, while Ethereum aims to help develop decentralized applications (dApps) with smart contracts.

Both blockchains produce digital currency (Bitcoin and Ether) as a reward for doing work to keep them secure. Even despite making purchases using Ether, the Ethereum blockchain itself was created with a completely different purpose.

Another massive contrast between BTC and ETH is the speed of processing transitions. Ethere network carries out 15 operations per second. In comparison, Bitcoin blockchain processes only 7 transactions.

How Ethereum works

In Ethereum, the blockchain acts as a real-time public ledger that records everything that happens on the network. Ethereum technology is similar to what we see in Bitcoin. Thus, a copy of every distributed transaction and every node on the system keeps a copy of this history.

This distributed digital ledger can be easily synchronized across a large-scale decentralized network. It makes Ethereum accessible to anyone who can get an Internet connection.

The Ethereum network contains blocks of data consisting of transactions and smart contracts. These blocks are linked together and represent a complete record of Ethereum’s history from the very first block. Some users create those blocks and distribute it to validators. It’s the name of users who validate them and confirm that they are “correct”.

Each blockchain has a specific type of consensus algorithm. The network uses these algorithms to negotiate a single correct data value. In Ethereum, all transactions are still being confirmed by miners using the same PoW system like Bitcoin.

What can Ethereum be used for?

So, we found out how Ethereum is different from Bitcoin. Let’s figure out what are the purposes of this revolutionizing network.

The Ethereum blockchain enables everyone to use all the benefits of distributed ledger technology. After the Ethereum system’s launch, it is no longer necessary to create a personal crypto network. For a comparably small fee, you can use a ready-made solution for making dApps. 

They can change the relationship between companies and their audiences completely. For example, they can charge a lower commission and propose a better trade of goods and services.

Another secret ingredient is the ability to create smart contracts. In essence, they are PC apps that control the transaction. Smart contracts effectively support operations and contract agreement in a fully virtualized setting. Thus, each qualified programmer can create its own Ethereum-based application with a strictly established working algorithm.

Advantages of Ethereum

As we mentioned before, Ethereum is one of the best-decentralized platforms for creating dApps. That’s why we can allocate 4 innovative benefits of the crypto Ethereum blockchain:

  • Immutability. The recorded data on the blockchain cannot be changed or deleted by a third party.
  • No censorship. Ethereum applications are based on a consensus network. It makes censorship impossible.
  • Security. The cryptographically secured Ethereum block chain has proven to be resistant to fraud or hacking. Ethereum has no central point of failure.
  • Transparency. All records can be found in the public domain. Confidentiality is rumoured to be expected in the future, but so far, all data is open.

Disadvantages of Ethereum

Ethereum has many benefits, but alas, nothing is perfect. Let’s figure out some problems with this blockchain system:

  • The smart contract programming code is not perfect. The DAO has become a shining example of how human error can lead to severe problems. If an error in the code becomes apparent, there is no real way to stop the attack other than network consensus and/or reworking the underlying code.
  • Ethereum deals are very slow. While speed is not essential in some cases, other situations can suffer significantly from this drawback. Ethereum coin network can handle around 20 transactions per second, while the Visa payment system processes over 1,500 operations.
  • Scalability is a problem for almost any blockchain, and Ethereum is no exception. 

Even Vitalik Buterin has doubts about Ethereum’s current potential of scaling. He said that this aspect actually sucks. There are many bottlenecks in Ether blockchain design because thousands of ‘nodes’ must process all transactions on the network.

What apps were developed on Ethereum?

Ethereum cryptocurrency can open up the dApps universe for all people without any experience in the crypto world. And the best thing is the implementation of smart contracts. Everyone can write and perform them through a MetaMask browser extension. Let’s explore some of the most prominent applications.

  • Gnosis — It’s a prediction platform with the possibility for all users to vote on many events.
  • EtherTweet — This website is an entirely uncensored communication platform for all users.
  • Weifund — It’s an open web space for crowdfunding campaigns with the use of smart contracts.
  • Bitnation — There’s the first virtual Blockchain nation in the world. There are many similar duties as a traditional nation, such as insurance, education, ID cards, diplomacy programs, and many others.
  • Ethlance — It’s a freelance platform that allows executing orders and getting cryptocurrency Ether.

State of the ÐApps makes a complete listing of decentralized applications. It’s available on the official website. 

How to get Ether

There are two ways to get Ether cryptocurrency: mine it or buy it.

Ether is mainly mined with GPUs (graphics cards) and specialized ASIC devices. Most of the Ethereum mining operations have reached an industrial scale so far.

Solving tricky puzzles to get Ethereum coins requires your system to work at maximum power continuously. The result is high electricity bills and faster wear and tear on equipment.

Have you ever been surprised at the amazingly high price of a video card? Now you should learn why this happened. At the peak of popularity, demand significantly outstripped supply. It led to a rise in prices for the GPU themselves and the shares of the producing companies. Capitalism at its best.

If you can’t afford to build a rig, you can buy cryptocurrency Ethereum on crypto exchanges. 

Why you should buy and sell Ether with Binaryx

Binaryx platform allows operating not only with Ethereum token but with other popular digital currencies. Binaryx offers a top-notch crypto trading terminal and exchange platform for both beginners and professional users. This company aims to create an entire ecosystem in which users can trade, learn, and monetize their cryptocurrency skills.

All ETH miners can try an intuitive and customizable interface. UI Binaryx is developed in close collaboration with experienced traders and uses an advanced design approach.

Future of Ethereum

Well, what is Ethereum? This platform can already be considered an insanely successful project. And there’s no doubt that one of the most innovative teams in cyberspace is working on it.

A severe downturn has hit crypto markets in recent months. An environment, manufacturability, efficiency gains, and real-world problem solving has been incredibly valuable.

Ethereum still maintains its quality. Moreover, Ethereum currency potential is far from being exhausted, and it still has no worthy competitors. The number of those who want to use the ready-made decentralized network’s resources is skyrocketing, and most of them choose Ethereum as the best platform. Therefore, the demand for this digital currency is excellent and tends to grow.

How much the Ethereum rate will grow in the coming years, no one can say with certainty. Reddit co-founder Alexis Ohanyan, for instance, believes that in 2018 ETH will hit the $15,000 mark and defeat Bitcoin. The outlook is very optimistic, given that Ethereum lags behind cryptocurrency gold by more than 1000%. But this scenario looks quite realistic in a couple of years.

Conclusion

We traced the history of Ethereum, focused on the difference between Bitcoin and Ethereum, and discussed its future perspectives. We hope that now the way Ethereum operates as the innovative space for dApps has become more transparent for all users.

The value of the ETH token depends on supply and demand, like any other asset. If new dApps will continue their development and the Ethereum network continues to attract investors, the price will continue to rise. And vice versa.

Although Ethereum can be deemed a veteran by the digital currency world’s standards, this technology is still at an early stage of its evolution. Many in the crypto community are waiting for how it will grow. The development of Ethereum is the key to a decentralized future. If the platform meets the expectations, it can drastically change some massive business and everyday life areas.

While it’s still early days, and there will undoubtedly be more hurdles to overcome, blockchain Ethereum looks to be a genuinely transformational platform. With many of the most exciting applications yet to be developed, we can only begin to wonder about the unimagined opportunities that await.