Ethereum is a combination of platform, digital currency and programming code.
Part of a cohort of increasingly popular cryptocurrencies, it functions as a decentralized and open source “programmable” block chain platform, and forms the basis of the digital coin known as Ether (ETH-USD), the largest digital coin after Bitcoin (BTC-USD) by market capitalization.
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Ethereum uses its own programming language known as Solidity, and the number of ethers that can be created is unlimited. This week, the platform should make a network switch to streamline transaction fees – but also destroy the coins in a way that increases the spot price of ether.
Co-founded by Russian-Canadian programmer Vitalik Buterin in 2013, development of the project began through crowdfunding in 2014, with the network going live in July 2015.
The Ethereum blockchain allows developers to build, deploy, and use decentralized applications on it. Otherwise known as decentralized finance or DeFi applications (“dapps”), these applications are capable of providing many financial services without the need for an intermediary such as a brokerage, bank or exchange, which makes transactions cheaper.
An example of such a service is the ability to borrow or lend Ether with interest. When Ethereum users use dapps, they have to pay a fee called “gaswhich is the price set by supply and demand between ethereum miners to complete a transaction on the blockchain.
Additionally, NFT (non-fungible tokens) can be created and traded within the Ethereum platform. NFTs, which have grown in popularity in recent months, serve as non-interchangeable digital tokens that can be bought and sold, and are connected to tangible real-world objects or digital properties such as art. Many other cryptocurrencies such as Golem (GLM-USD) also operate within the Ethereum blockchain and have used the platform for initial coin offerings (ICOs).
Ethereum 2.0, also known as eth2 (or Serenity), is an ongoing series of upgrades to its platform that aims to improve the platform’s scalability, speed, and security to enable a higher volume of transactions, reduced bottlenecks and lower fees.
Ethereum 2.0 also involves the transition to a proof-of-stake (PoS) protocol from the current blockchain proof-of-work (PoW) protocol.
How do you invest in/buy Ethereum?
Like many other cryptocurrencies, Ethereum can be bought and sold through cryptocurrency exchanges such as Coinbase (CURRENCY) and Binance. Trades usually take place on these exchanges 24 hours a day, 7 days a week, unlike stock exchanges. These exchanges are just platforms that connect cryptocurrency buyers with sellers and vice versa. Some of these exchanges may charge fees for transactions.
One important thing to note is that cryptocurrency exchanges are not the same as cryptocurrency wallets. A cryptocurrency wallet is a place that digitally stores your cryptocurrency after it has been purchased. Wallets can take the form of hosted wallets (most popular and easiest to set up) where a third party holds an owner’s crypto for them, non-custodial wallets (software that gives owners full control of their crypto ) or hardware wallets. (physical devices that store crypto offline). Some platforms provide users with a wallet in addition to the services offered by its exchange.
How do you mine Ethereum?
Besides buying it from an exchange, mining is another way to acquire ether. Similar to bitcoin, Ethereum is “mined” using computers to solve cryptographic mathematical puzzles and validate transactions in the blockchain’s ledger. As users’ computers solve these equations, they can contribute to building the blockchain and reap a reward in return in the form of ether.
Three ways to mine Ethereum are via: pool, cloud or mining alone. Each of these methods has its own advantages and disadvantages, as well as its respective barriers to entry. Pool Mining is the easiest and fastest way to start mining Ethereum.
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