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What is Ethereum (ETH) and How does it Work?

Ethereum was created in 2015 by Russian-Canadian programmer Vitalik Buterin. Buterin first described Ethereum in a white paper in 2013 when he was still a student at the University of Waterloo in Ontario, Canada.


Ethereum was created in 2015 by Russian-Canadian programmer Vitalik Buterin. Buterin first described Ethereum in a white paper in 2013 when he was still a student at the University of Waterloo in Ontario, Canada.

In 2014, the project raised $18.4 million in an ICO (initial coin offering). Ethereum is now the second-largest cryptocurrency right behind Bitcoin with a current market cap of over $20 billion.

What is Ethereum?

In Layman's terms, Ethereum is an open-source software blockchain-based platform that provides the tools for developers to build decentralized applications.

How does Ethereum work?

The cryptocurrency behind Ethereum is called Ether (ETH). It is a digital asset that works similar to Bitcoin. Ether (ETH) is decentralized, meaning it is not controlled by a third party including governments and banks, and it can be sent as payment to anyone around the world anytime.

Unlike the Bitcoin blockchain, however, the Ethereum blockchain is programmable. Developers can build their smart contracts and decentralized applications (DApps) on the Ethereum platform.

The stable coin DAI and the game CryptoKitties are some notable applications built using the Ethereum platform. Decentralized applications are the backbone of cryptocurrency and blockchain technology.

It is deemed trustworthy as it cannot be changed or manipulated and once uploaded to Ethereum, they will always run as programmed.Thousands of developers use Ethereum's platform to build all kinds of applications from crypto wallets and financial applications to games and social media networks.

What is the Ethereum Virtual Machine?

The Ethereum Virtual Machine is Ethereum’s core innovation. It is a software that runs on the Ethereum network. The Ethereum Virtual Machine (EVM) is embedded within each full Ethereum node and is responsible for executing contract bytecode, a program code that has been compiled from source code into a low-level code designed for a software interpreter.

Smart contracts on the Ethereum platform are usually written with high-level languages like Solidity and then compiled to EVM bytecode. EVM has successfully implemented many programming languages like C++, Python, JavaScript, Ruby, and more.The EVM is crucial to the Ethereum platform as it allows anyone to execute code in a trustless ecosystem.

What is Ethereum 2.0?

Ethereum 2.0 (Serenity) is Ethereum's major network upgrade. It is set to launch near the end of 2020. It is said to bring out sharding, proof-of-stake (PoS), and a new virtual machine to help with current scalability issues, mining issues, and some issues with security including proof-of-stake solutions.

Ethereum 2.0 will open opportunities for developers to help make Dapps better, add to its scalability, and help achieve the vision of DeFi. Furthermore, Ethereum is ranked the 2nd largest cryptocurrency because the majority of start-ups have chosen to use ECR20 smart contracts.

Ethereum 2.0 might lead to a stronger dominance for Ethereum against its competitors.

How to mine ETH?

Ethereum mining works similarly to Bitcoin mining. Powerful computers compete with one another to be the first to validate transactions by solving a complex computational equation. They are then awarded ETH as payment. The transaction fees are known as "gas."

There are three ways to mine Ethereum: solo mining, joining a mining pool, and cloud mining. Mining alone means not needing to share rewards with anyone else, but mining is only profitable with a lot of computing power and resources.

Solo mining often runs into problems like ventilation, electricity costs, space, hardware costs, and overheating problems. Joining an Ethereum mining pool is probably the easiest way to get started.

It is easier to mine with a group than to mine alone; the more people, the higher the chance of getting the reward. But this means sharing profit and working together. Every Ethereum mining pool works a bit differently depending on its size and fee.

Ethereum cloud mining is renting someone else's time and computer to mine. This removes the hassle of hardware maintenance, but money is paid upfront. Be sure to do proper research to avoid scams when looking into mining contracts.

The new Ethereum 2.0 set to release later this year could switch to a proof-of-stake framework instead of the proof-of-work framework now. This means Ether (ETH) mining could no longer be relevant.

How to buy Ethereum?

The easiest way to get ETH is to buy it through an online cryptocurrency exchange. Our cryptocurrency exchange application can help you find the exchange best suited for your needs. Ethereum can be purchased with other cryptocurrencies like Bitcoin, credit cards, wire transfers, and more.Please make sure the exchange you choose is supported in your country of residence.

Ethereum Wallets

Many wallets support Ethereum. The best way to store any crypto is in a cold or offline hardware wallet.Software wallets are a good free alternative hardware wallets, just make sure the wallet is reputable, and with 2-Factor Authentication.Read reviews and find the best wallet for you here.

Ethereum Future

Ethereum's future is bright. It is the 2nd largest cryptocurrency, and with its new updates rolling out this year, we can only expect more greatness. Ethereum is not only a cryptocurrency but also an important platform for decentralized applications and smart contracts.

More and more institutions are adding cryptocurrency to their portfolios. Many investors are now teaching people on how to invest in Ethereum and other cryptocurrencies.

If you are wondering "should I invest in Ethereum," please do your own research before making investment choices, and find credible institutions if you do decide to let them invest for you.

Marina L

Dog mom of two and nugget enthusiast. Reddit and video game addict. Co - founder of Vyntex Developments.

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