Guide to Ethereum: features, value, wallets, price, where to buy

Guide to Ethereum: features, value, wallets, price, where to buy

» » Guide to Ethereum: features, value, wallets, price, where to buy

Guide to Ethereum: features, value, wallets, price, where to buy


In this article, we will explain what is Ethereum, what value it has and with simple illustrations, we show how it works and where to buy and store ETH.

Ethereum (ETH) price

1. Introduction to Ethereum (ETH)

About Ethereum

 Slogan: Ethereum blockchain App platform

Ethereum is a blockchain protocol that allows developers to create decentralized applications (DApps) and smart contracts whilst users around the world can use them, and to do that they need Ether.

The main advantages of decentralized applications are that they are not subject to hacker attacks (because there is no central link), there is no payment for their hosting (for example, hosting fees), they are not subject to third-party interference (for example, hosting provider).

Thanks to smart contracts, you can automate the process of exchanging values and remove intermediaries (for example, a user wants to buy a ticket for a concert, he sends coins to a smart contract and receives an electronic ticket, hence this chain has no intermediaries).

If the term “Blockchain” is a new concept for you, we recommend first to read our introductory article “What is blockchain technology in simple words and how it works“ then before studying this article.

 

The History of Ethereum

The idea of Ethereum was proposed by the founder of Bitcoin Magazine, Vitalik Buterin, at the end of 2013, while in April, 2014, Ethereum’s co-founder, Gavin Wood, published Yellow Paper – a detailed specification of Ethereum network) where he disclosed in details the essence of Ethereum Virtual Machine.

The network itself was launched on July 30, 2015. The Ethereum project is being developed with funds from the Ethereum Foundation https://www.ethereum.org/foundation, a non-profit organization that is registered in Switzerland.
Before the launch of the network, funds were collected to finance the development and an amount of about $18 million was collected within the 42-day placement of the tokens (ICO).

The Ethereum in the nowadays known form was created thanks to the efforts of many people, more details about the history of the creation can be found in this article.

The Ethereum Team

The main members of the Ethereum Foundation Board are:

– Vitalik Buterin

Website, Twitter, GitHub

He learned about the blockchain for the first time in 2011and started to publish Bitcoin Magazine, and in November 2013 he wrote articles for the Ethereum network.

At the moment, he heads a research team that is working on improvements to the current version of the Ethereum protocol.

– Patrick Storchenegger

Attorney and notary in Switzerland in Zug canton (where the Ethereum Foundation is registered). He has extensive experience in international and business consulting.

– Jeffrey Wilcke

The developer, one of the founders of Ethereum. He started the first implementation of Ethereum using the Go programming language. The Go client was successfully launched in July 2015, noting the release of the first block (the genesis block) of the Ethereum network.

 

2. The Ethereum Technology

The official Ethereum promo video states that Ethereum is a global computer (Ethereum Virtual Machine), which consists of thousands of participants around the world: one group – miners – contains transaction registers and provides their capacity for calculating rent; the second group – developers – create decentralized applications, and the third group – users – use these applications.

The advantage of the decentralized computer is that it does not have a central link that can be attacked (if one or a hundred computers are hacked, the network will not suffer from this).

As well as in any public blockchain network, the data in the Ethereum are protected from counterfeiting and interference by third parties.

What are the Ethereum decentralized applications (DApps)

Decentralized applications (DApps) can be used in various areas of the economy from eCommerce to the Internet of things (IOT).

Decentralized applications are stored in a public blockchain network and their developers do not need to pay for their storage.

The language of DApps 

Smart contracts in Ethereum are presented in the form of classes that can be implemented in different languages and compiled into the bytecode for the Ethereum Virtual Machine (EVM) before being sent to the blockchain.

What are Smart Contracts

A smart contract is a software algorithm that allows automating processes through automatic calculations in EVM (Ethereum Virtual Machine).

For example, during the ICO (initial coin offering), you send an aether to the smart contract of the project and automatically receive tokens of this project (or you can get these tokens through the time when the ICO is completed).

Ethereum has become such a popular blockchain for conducting ICO thanks to the automation of fund-raising processes with the help of smart contracts.

Solidity is the main programming language for writing smart contracts.

What is Ether (ETH)

Ether – this is the exchange unit that circulates in the Ethereum network, with the help of which users can exchange tokens and use smart contracts. In other words, the ether is not just a cryptocurrency which can be transferred without intermediaries but also it is a “fuel” for the operation of decentralized DApps applications.
Ether is an incentive for developers to create effective applications that consume little Ether whilst fulfilling the tasks set.

Where did the Ether (ETH) come from and how do new coins appear?

The Ether appeared as a result of raising funds for the development of the Ethereum in 2014 (pre-sale).

A total of 60 million coins were issued, of which 12 million (20%) were transferred to the Ethereum Fund.

Once in 15 seconds, another 5 Ethers are created, namely, a new block with data in the Ethereum blockchain, and the miner who validates this block receives 5 newly created Ethers.

Sometimes 2-3 Ethers are created which are paid to another miner who also solved the problem to confirm the block but did not receive a reward for it. This type of reward is called an  “uncle/aunt reward”.

A maximum of 18 million Ethers per year can be produced (according to the initial conditions of the Ethereum release). The consensus mechanism and the technology of issuing new coins will change with the Ethereum’s upgrade to Casper version.

Ethereum Consensus Mechanism

At the moment, the consensus mechanism is made on the Proof of Work network or the mining (similar to bitcoin). A total transition to the proof-of-stake protection method is planned in the future with a hybrid model at an intermediate stage. Despite this, there is protection from the creation of ASIC due to the high demand for video memory GPU, which is constantly growing (2.04 GB as of July 2017).

 

3. Cases on Ethereum Blockchain

There is a whole marketplace where decentralized applications are offered (DApps) created on the Ethereum blockchain: https://www.stateoftheDApps.com

There are thousands of them and each performs their functions (from online games to decentralized cryptoexchanges).

The most famous DApps created on Ethereum blockchain is (sorted alphabetically):

– 0x – The protocol for trading tokens on Ethereum blockchain (ERC-20 tokens)

Bancor – Built-in price discovery and a liquidity mechanism for tokens

ForkDelta – exchange for tokens based on Ethereum blockchain (ERC20 tokens)

IDEX – Distributed exchange made of smart contracts

OmiseGO – Project that helps unbank population to use the bank services

SONM – Fog computing platform where users can rent computing power

Storj – Cloud storage

 

4. Where to buy & store Ethereum (ETH)

Where to store Ether

Ethereum Hardware Wallet

Hardware wallet – it’s a separate device (usually like a usb-flash memory, sometimes with the screen) on which various cryptocurrency are stored:

– Ledger Nano S

– Trezor

Both of these hardware wallets support the ability to store various cryptocurrencies, Ethers and ERC-20 tokens.

Ethereum Desktop Wallets

Metamask is a very popular Ethereum wallet for desktop. It has received funding from the Ethereum Foundation and Consensys. It allows you to easily store Ether or ERC20 tokens.

The Mist Wallet is an Ethereum wallet created by the Ethereum Foundation.

Exodus – a popular desktop multi-currency crypto wallet with the beautiful interface.

Ethereum web wallets

MyEtherWallet is probably the most popular Ethereum web wallet. A web wallet is a wallet that works like an account on any other website. It lets you login on any device using a username and password. This wallet is less secure because your data could be stolen by hackers.

Ethereum iOS Wallets

– BRD

– Jaxx

– Coinomi

Ethereum Android Wallets

– BRD

– Coinomi

Where to buy Ethereum

a)Exchangers

Exchanger – is a web-site where you can buy Ether with no registration:

– Changelly

b) Cryptoexchanges

You need to register on crypto-exchanges and after registration, you top up an account with fiat and then buy cryptocurrency. Afterwards you can withdraw purchased cryptocurrency from an exchange wallet to your personal wallet (hardware/desktop/mobile) which shall be created in advance.

– BINANCE

– CEX.IO

– EXMO

5. Conclusions

Ethereum gave the world the opportunity to develop decentralized applications (DApps) and launch them in a public network using EVM (Ethereum Virtual Machine), also it became possible to automate a variety of processes including the exchange of values without the intermediary’s participation through the smart contracts mechanism.

Despite the existing restrictions in the Ethereum network (increasing complexity of mining, low transaction speed, difficulty of Solidity language, frequent mistakes of developers in smart contracts that lead to the loss/freeze of funds), this technology will continue to develop, as the Ethereum community consists of hundreds of thousands of people all over the world who are interested in the development of this platform.

Moreover, the Ethereum’s development is facilitated by:

– Ethereum Alliance, the main task of which is to research and implement Ethereum blockchain in the largest banks and financial corporations (for example, JPMorgan Chase & Co. (JPM), Microsoft Corp. (MSFT) and British Petroleum (BP), a full list of the participants is updating on this page.

Consensys is an organization that unites developers, start-ups and investors into Ethereum projects.

 

Ethereum mind-map

Ethereum features, valuse

Download mind-map in .PDF


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