A lot of people think Ethereum is a cryptocurrency, THAT IS WRONG! Ethereum is not a cryptocurrency, rather it is the name of a blockchain. Now, the Ethereum blockchain has a native cryptocurrency called “ETH” or “Ether” which is popularly called Ethereum. In this post, we will be looking at Ethereum and Its Unique Versatility In Cryptocurrency.
What Is Ethereum?
Ethereum is an electronic program, powered by blockchain technology. It is best known for its native cryptocurrency called “ETH”, or “Ether”. However, the coin is popularly called Ethereum. As of January 2022, Ethereum (Ether) was second in overall cryptocurrency market value after Bitcoin.
Vitalik Buterin conceived the Ethereum project, published a white paper to introduce Ethereum in 2014, and the following year, Ethereum was launched in 2015. Vitalik Buterin and his team were also the first to suggest that blockchain technology could be used for much more, exceeding just the use of making financial transactions in cryptocurrency.
Information Technology experts have also suggested that Ethereum is the next step in the evolution of the internet.
Is Ethereum a Cryptocurrency?
Ethereum is the world’s first programmable blockchain, it is an electronic, programmable network with many decentralized applications (dApps), including cryptocurrencies built on it. The Bitcoin blockchain, by contrast, was created only to support the bitcoin cryptocurrency.
Remember that the maximum number of Bitcoins that will ever be created is 21 million, but, the amount of ETH that can be created is unlimited, however, there is a limit to the amount of Ether that can be minted each year. The number of Ethereum coins in circulation was more than 118 million as of December 2021.
Ethereum and Its Unique Versatility In Cryptocurrency
Topics on Ethereum and Its Unique Versatility In Cryptocurrency is widely discussed in the cryptocurrency community. firstly, with the Proof of Work mechanism, the decentralized (Distributed) nature of the blockchain technology is one of the main reasons the Ethereum network is highly secure. An extensive network of computers maintains the Ethereum blockchain network. The network itself, demands an agreement from a majority of its participants (above 50%) before any changes can be made to its blockchain. Anyone or group who seeks to manipulate the Ethereum network would need to gain majority control (above 50%) of the network’s computing power.
A fascinating feature of the Ethereum blockchain is that users can build applications that “run” on the blockchain, like software “runs” on a computer. The network’s users can create different applications on the network’s platform. People can also host applications on the Ethereum blockchain rather than hosting on servers of private companies like Google, with centralized control. This gives users control over their data and they have free use of applications as there’s no central authority controlling it.
The Future of Ethereum
Ethereum and Bitcoin operate using the Proof of Work consensus mechanism. This involves high-end computers engaging in a race to solve complex mathematical equations, the winner gets the right to update the blockchain with the latest block and gets rewarded with some crypto. On the Ethereum blockchain, a new block is created every 12 seconds.
However, this method requires high amounts of electricity and that is not good for the planet, Secondly, due to the vast nature of the Ethereum network, transaction fees also called “gas” are so high, that sometimes users have to pay half of the total transaction as fees.
Ethereum’s transition to the proof of stake protocol will enable users to validate transactions and mint new ETH based on the amount of their staked ETH, it is part of a major upgrade to the Ethereum platform known as Eth2. The upgrade also helps to address network congestion problems that have driven up gas fees.
To become a validator, one must stake a minimum of 32 ETH. These validators temporarily deposit their currency and earn rewards in the form of Ether for verifying transactions. By leaving a computer connected to the network, participants earn Ether as a reward for their efforts. The idea is that those who stake their ETH have the best network intentions in mind and will do whatever they can to ensure its success. Plus if a participant fails to participate or tries something malicious, they can lose the investment, this is called slashing.
How Can I Buy Ethereum?
Quite a few cryptocurrency exchanges are available for purchasing Ether. Different platforms have different pricing, so doing some research before signing up is a good idea.
Secondly, you need to open an account with a crypto exchange before you can buy Ether, you will supply some personal information and have your identification verified. Then you’ll be able to fund your account by linking your bank account or debit card. After linking, you will fund your crypto exchange account and purchase Ethereum (Ether).
- Ethereum has a large, “battle-tested” network that has been proven through years of operation. It has a great and dedicated international community and the largest ecosystem in blockchain and cryptocurrency. This has also proven the fact that it is a very secure system and less prone to the notorious 51% attack.
- Its native coin “Ether” can be used to carry out transactions just as every other cryptocurrency.
- Besides being used as a crypto coin, Ethereum can also be used to process other types of financial transactions through smart contracts and store data for third-party applications built on the network.
- A large community of Ethereum developers is always researching, looking for new ways to improve the network.
- Ethereum’s popularity has led to higher transaction costs. In February 2021, fees also known as “gas,” hit a record $23 per transaction, and unlike Bitcoin, where the network itself rewards transaction verifiers, Ethereum requires those participating in the transaction to pay the gas.
- Not more than 18 million Eth can be minted in one year, however, there’s no limit on the potential number of coins to be minted over time. This could mean that as an investment, Ethereum might have the potential for inflation.
- As the network continues to evolve, there is a lot of uncertainty about the programmes already running on the network and how the users, developers and investors will cope, as there are still a lot of uncertainties that are yet to be addressed.
Having the title of “The Future of the Internet” is no easy feat. Ethereum has come a long way from being just a concept to growing and becoming the backbone and foundation for other cryptocurrencies, social media applications, contracts, and agreements, It is said that smart contracts (built on Ethereum) would eventually eliminate lawyers.
A lot of prospects are still yet to be implemented, however, the consensus has it that Ethereum, despite all its achievements, is yet to start living up to its full potential.
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