Ethereum came out of nowhere in the early days of crypto currency to become the second largest power player in the alternative currency market, right behind Bitcoin. But Ethereum is far more than the “second best.” A far more scientific and well-researched crypto currency than other initial coin offerings, and offering stability and strong backing and support, it’s no surprise how much of a following Ethereum has received over the past three years.
Ethereum is a highly decentralized platform based on the blockchain. It was founded in 2014 by Vitalik Buterin. Like Bitcoin, Ethereum is an entirely open-source financial project unowned by a single individual or business entity. What this means is that anybody anywhere can download a software and interact with the network.
Unlike Bitcoin, the central concept of Ethereum has never been to be a replacement currency option. Instead, Ethereum was created on the idea of smart contracts, agreements between two parties without the need for mutual trust or escrow services.
Ethereum utilizes virtual machines to achieve its goals, which consists of thousands of computers all over the globe running Ethereum’s software. The currency unit of Ethereum is called “ether,” and people interact with the network by paying the network in ether for smart contracts.
You might be thinking “wait, that sounds like a massive workaround for exactly what Bitcoin does.” You are correct. It’s a cryptocurrency that can be traded, just like Bitcoin. But the “trades” are “smart contracts.”
The cryptocurrency mining process for Ethereum is like mining any other crypto-coin. The process serves multiple purposes, as it not only will assist in transaction processing into the Ethereum blockchain but will also release new ether into the crypto market. Ethereum mining consists of compiling operations into blocks to solve a puzzle. The first miner to decode the mystery adds the block to the chain and receives a reward
Ethereum mining is an entirely decentralized process, performed by anyone with knowledge and access to do the coin mining. The only requirements necessary are a fast internet connection and hardware capable of being pushed to its extents. Network security is dependent on the decentralization of Ethereum, as decisions are made by consensus by all parties present. Block rewards currently provide most of the miner incentives for Ethereum miners.
Ethereum mining difficulties directly correlate with the level of effort put into the process across the Ethereum cryptocurrency network. The system adjusts difficulty of mining often to ensure that the Ethereum block discovery rate does not falter due to supply and demand of Ethereum miners. More needed computing power means the difficulty to mine is more challenging, maintaining barriers to entry and ensuring that mining doesn’t get too heavily saturated. Most of the operational costs for Ethereum miners derive from computing hardware or high costs of electricity.
An Ethereum exchange is a digitally-built and highly securitized marketplace, in which cryptocurrency traders can make decisions to collectively or individually purchase and sell Ethereum. These purchases and sales are made between different “fiat currencies” (another term for legal tender like the US dollar or Spanish peso) and various altcoins (for example, trading Ethereum for Bitcoin, Bitcoin Cash or Litecoin).
Ethereum, which utilizes the currency ticker symbol ETH, is the second most popular and most heavily traded crypto-coin on most current cryptocurrency exchanges.
Ethereum exchanges work to match crypto-coin purchasers with Ethereum sellers. Very much like a regular physical stock exchange, cryptocurrency traders have the choice to purchase and sell Ethereum by either inputting a market order or a limit order.
Two of the best, most reliable exchanges for the purchase and sale of Ethereum cryptocurrencies are CoinMama and Bitstamp. More information on these two exchanges can be found in the Ethereum Exchanges section of the List of The Most Reliable and Highest Quality Exchanges article. Click here to know how to buy or sell Ethereum.
Similar in nature to your generic wallet, placed in a purse or pocket to store currency and plastic cards, an Ethereum wallet is utilized to store quantities of Ethereum/ether. The main difference between the two of these wallets (besides the obvious) is that the crypto wallet is used to store collections of private, secure transaction keys. In most cases, an Ethereum wallet is very heavily encrypted for prevention of unauthorized access to the Ethereum wallet by malicious parties.
Unlike the true Ethereum network or blockchain, an Ethereum wallet is controlled singularly, by its owner(s). This process is instead of being a fully distributed public being, such as the blockchain. It is extremely important to keep tabs on your Ethereum wallet and to keep it safe if you opt for a physical form of wallet such as a thumb drive.
The most effective version of wallet for those not concerned about ridiculous layers of safety and security would be the online wallet, offered my most, if not all, exchanges. To step to the next level would be to obtain a mobile wallet, where your Ethereum transactions are stored offline on your mobile device. From there comes a desktop or hardware wallet, which has far higher security, but runs the risk of complete loss due to corruption of physical theft of the hardware.
The Choosing the Correct Type of Wallet for your Coins article has far more information on the various types of cryptocurrency wallets available, as well as which work best for which situation, including Ethereum.
Prior to the conception of cryptocurrencies, financial transactions are done by banks and credit card companies to secure and obtain a portion of it in the form of fees. This traditional way of transacting is now removed by a decentralized electronic cash system which makes it more secure to convey money. This led to the use of cryptocurrencies or virtual coins as medium of exchange for that appear only in cypto-ledgers.
Ethereum (ETH) is a cryptocurrency which is one of those “virtual coins” that were put in place to facilitate cryptocurrency transactions. Today, Ethereum is a popular choice in the cryptocurrency culture. Ethereum is a blockchain-based technology or a distributed ledger technology (DLT) currency which is processed by a decentralized virtual machine known as the Ethereum Virtual Machine.
The distribution featured a smart contract functionality which can accomplish peer-to-peer contracts and transactions using a crypto-fuel Ether. Ethereum’s closest rival, Bitcoin, was responsible for the launching of blockchain technology while Ethereum revolutionized it.
Obviously, Ethereum was created to overtake its major competitor in cryptocurrency: Bitcoin. The birth of this new coin came after 5 years when crypto-technology was introduced in the virtual world by an anonymous programmer or group of programmers, Satoshi Nakamoto, leading to the creation of Ethereum’s major competitor, Bitcoin.
Its founder, Vitalik Buterin, was a former Bitcoin programmer who tried to develop a new platform using a general scripting language. Ethereum Switzerland GmbH was the company responsible for developing the first software project for the Ethereum coin way back in the early part of 2014. In the middle of the same year, a presale of Ether (Ethereum’s coin) has recorded a sale of $14 million. On September 2014, presale investors have received $60 million Ether which $12 million has been allocated to its developer. Ethereum Foundation also received whatever Ether was left thereof.
Inspired by the results of its first sales, Ethereum allowed the creation of five ETH for every block mined. Despite the questions raised on the security and scalability of the Ether currency, this did not stop the company from releasing its initial version, Frontier, the following year.
In 2016, Ethereum’s protocol underwent an upgrade and eventually caught the attention of media especially when its sales spiked up to $150,000,000.
Then in the middle of 2016, the data access object for Ethereum was hacked by an unknown group who claimed $50m of ETH. The year 2016 witnessed the split-up of two groups in the Ethereum network: Ethereum (ETH) and Ethereum Classic (ETC). The breakup was followed by a series of conflicts for the Ethereum, where the issue focused on extra-protocol intentionality, decentralized decision-making, and conflict resolution procedures. In the same year, Ethereum Classic disputed for blockchain immutability, for rebellion, and for the code to be treated as a law or standard procedure. Eventually, Ethereum developers, business partners, miners, and users withdrew themselves from ETC.
From this background, Ethereum is all poised to totally overtake bitcoin soon. Today, Ethereum’s rise is remarkably higher than other cryptocurrency networks of other virtual currencies that its success was attributed to the partnerships it has created within the scope of its distribution network.
At the end of the first quarter of 2017, its daily volume of sales has reached up to $450 million. From its $100 mark, Ethereum demonstrated a great rise above $400, or a 5001% rise at the beginning of the year. It remains even more bullish after the coin was sanctioned by Russia.
With its integration of its blockchain technology, Ethereum’s distribution expanded to corporate and government partners. Among these strategic alliances include the following names: Microsoft, JP Morgan Chase, IBM, R3 consortium with 30 other companies known as the Enterprise Ethereum Alliance or EEA. Aside from Microsoft and JP Morgan, the names of ING, CME Group, BNY Mellon, Accenture, and Wipro came up as its founding members.
Microsoft, JP Morgan, and Santander are those names known to have taken active involvement in exploration of the blockchain technology in the recent years. All the others have set their sights in taking an active part in revolutionizing the technology.
The EEA has established its goal to develop a single standard iteration of Ethereum software for all kinds of business that can be used to track and manage their financial contracts and data. While the partnership was created as a nonprofit body, its goal appears to leverage the revenues of the syndicate companies and the business world.
Today, while crypto-mining remains unrestricted; Ethereum has elicited the interest of many enterprises and experimenting with Ethereum. The coin is also supported by both Microsoft Azure and Alibaba Cloud to boost widespread innovation and adoption of the technology.
With the formation of the EEA, all enterprises, startups, vendors, experts, and academic efforts were brought together to work on Ethereum as an enterprise technology. Eighty-six members were recently added in the EEA this year bringing their total membership to 116. The list now includes other well-known names in the business world found across different countries or regions and industries. This includes Mitsubishi UFJ, Deloitte, DTCC, Samsung, Infosys, Toyota Research Institute, Merck KG&A, and the National Bank of Canada.
Microsoft holds the view that Ethereum continues to grow in order to answer the needs of business enterprises all over the world. As Ethereum continues to argue over permissions and pluggable architecture and to retain its origins, Ethereum widens its scope even more beyond what developers, businesses, and consortiums can achieve.
According to the world-famous automaker, Toyota, Ethereum and its blockchain technology can help fast-track the company’s development of independent driving and lower customer costs. To Infosys, Ethereum holds a promising future with its architecture that can accommodate smart contracts, scalabilities, and issues on security.
Merck, the world’s oldest chemical and pharmaceutical company looks ahead to equip itself for the future digital markets in health care and related life sciences with its investments in Ethereum.
In the case of Deloitte, the company is keen toward its active participation in EEA and spurs the adoption of the blockchain technology all over the world.
In summary, Ethereum’s blockchain technology has become the world’s most acceptable cryptocurrency technology that is capable of leveraging transparency among supply chains, financial trade settlements, and peer-to-peer transactions without the need for any centralized intermediation.