What is Ethereum?
Ethereum is created in 2015 by Vitalik Buterin. Ethereum, just like Bitcoin, uses blockchain technology to power the decentralized network. But where Bitcoin can be used for just one purpose (electronic cash), Ethereum can be used to build decentralized applications using smart contracts.
Smart contracts can facilitate a lot of things. For example, exchange of money, contracts between multiple persons, shares, property/ownership and much more. These smart contracts run on the Ethereum network making them very secure and almost not hackable. But keep in mind that smart contracts are just a form of software. Smart contracts make most third party’s unnecessary.
Let’s say you rented your car to someone. You set up a smart contract on the Ethereum network. This smart contract holds the monthly payments and all other things both parties agree about (like insurance).
After a few months, you did not receive any payments. It seems the person who rented your car stole your car. The smart contract expected a payment but did not receive any. That means the smart contract is broken. And the car will shut down. This is how powerful smart contracts can be.
Also, think about a voting system for presidential elections. With smart contracts, everybody can vote from their own home. Smart contracts are very safe and are hard to manipulate.
Is Ethereum the new Bitcoin? No. Bitcoin and Ethereum are not competing with each other. Ethereum will probably not be used as a currency. Because there are unlimited Ethereum tokens. Bitcoin and Ethereum can perfectly exist next to each other.
But keep in mind that Bitcoin makes or breaks any cryptocurrency at this time of writing. When Bitcoin prices fall, every other cryptocurrency (including Ethereum) will fall with it.
|Block time||~ 25sec|
|Current block reward||5 ETH|
|Traded on exchanges||Coinmarketcap|
Ethereum uses the POW (Proof of Work) algorithm based on Ethash. That means you need computer hardware to mine Ethereum. It is still profitable to mine Ethereum with a decent GPU. But this depends on the current price and if you have to pay for the power bill.
Ethereum developers are planning to move to the POS algorithm (Proof of Stake). This update is called Casper. With a POS algorithm, there are no miners. Bitcoin and Ethereum miners spend millions of dollars on electricity. With POS mining will stop.
When Casper will be implemented is still unknown. But this update will have a big impact on the Ethereum network and will change it forever. For now, you can still mine Ethereum with a decent GPU.
Ethereum circulation and block info
At this time of writing, there are 94,484,134 Ether tokens in circulation. With a current price of 327$ making it the second largest cryptocurrency behind Bitcoin. Ether tokens can be created without limitations. That means there are an unlimited amount of Ether tokens.
If you want to look up Ethereum addresses or transactions you can find them at etherscan.io
What can you do with Ethereum?
A lot! You can build decentralized applications using the Ethereum network. That basically means you can build almost anything you like. You can also use Ethers to participate and use these applications.
Most ICOs use the Ethereum network to fund their new projects. But the most people will use Ethereum as an investment vehicle. Buying Ethereum and holding it for a long time. Or using Ethereum for day trading.
Ethereum is way too volatile to use it for any real world financial application. For example, the price of Ethereum plummeted in June 2017 from ~$380 to $150 in July 2017. And this had nothing to do with Ethereum but everything with Bitcoin. When the price of Bitcoin falls, every other coin with do the same.
That’s why Ethereum is mostly used for trading. But it’s only a matter of time when Ethereum will become very useful in the real world and prices will stabilize.
Official websites and social media channels
- Website: https://ethereum.org/
- Wallet: https://ethereum.org/
- Twitter: https://twitter.com/ethereumproject
- Reddit: https://www.reddit.com/r/ethereum/
- Bitcointalk.org: https://bitcointalk.org/index.php?topic=428589.0
- Where to buy Bitcoins: DinoTrader PriceCheck