Ethereum is a developer platform for the creation of decentralized applications running on blockchain, through the use of smart contracts.
It was launched on June 30, 2015 by Vitalik Buterin and has been gaining popularity ever since. At the time of writing, Ethereum’s market cap is at $4,713,144,698 – only second to Bitcoin.
Just like Bitcoin, Ethereum is a platform based on blockchain technology. Blockchain as we know it has many applications that go beyond digital currencies. Today, Bitcoin is one of the several hundred of applications that use blockchain.
In simplest terms – Ethereum is an innovation based on the technologies and concepts that originally pioneered Bitcoin.
What is a smart contract?
‘Smart contract’ aka cryptocontract is a term used to describe a program that help you exchange money, property, shares, or anything of value in a transparent, conflict-free way.
These are the programs that follow a series of steps every time they receive a message called a transaction.
Think of a smart contract as a traditional contract between two parties. It can not only define the rules and penalties of the agreement, but also automatically enforce those obligations.
Smart contracts achieve this by by taking in information as input, assigning value to that input through the rules set out in the contract, and executing the actions required by those contractual clauses.
What is Ethereum currency?
Ether is the currency or value token of the Ethereum blockchain. That means Ether is required by anyone wanting to build upon Ethereum platform.
It is listed as ETH and traded on cryptocurrency exchanges like any other cryptocurrency.
How do I buy Ethereum?
There are three ways you can get hold of Ethereum.
1. Buy Ethereum with fiat currency
Most popular exchanges to buy ETH with USD, EURO, Yuan and other currencies are Coinbase and Cex.io.
2. Buy Ethereum with Bitcoin
You can also use Bitcoin to buy ETH from the trusted cryptocurrency exchanges like Poloniex and Bittrex. This way you can buy ETH from anywhere in the world.
3. Mine Ethereum
Mining Ethereum is similar to Bitcoin mining. There is a diminishing block reward for every block mined. It uses proof of work. To make any ETH by mining you will need multiple dedicated GPUs to get some real rewards.
Alternatively, you can buy ETH mining contracts. That means you let someone else take a part of your ETH to mine it on your behalf. This will include equipment, management, maintenance and setup costs.
Ethereum Price History
In May, 2016 Ethereum price took a major turn when thousands of people pumped $150 million into the biggest crowdfunded project in history, called the Decentralized Autonomous Organization (DAO).
The whole project was entirely funded with Ether. This in turn made ETH trade at an all time high ($14.80) back then.
Ether, a currency that was trading at around $1 in January 2016 saw a 15-fold increase in six months. DAO has proved so popular among holders of Ether, that the DAO now accounts for almost 14% of the value of all Ether in circulation.
At the time of writing (March 2017), ETH is trading at $52.31. To give some perspective, just a couple of weeks ago the price was hovering around $20. This fluctuation is very recent. Here is the price comparison of Bitcoin and Ethereum in 2017.
Ethereum vs Bitcoin
Both Ethereum and Bitcoin have the same same underlying principle of distributed ledgers and cryptography, but they differ in various technical ways. For instance, Ethereum uses Turing complete as its programming language whereas Bitcoin is in a stack based language.
There are more differences:
1. The pre-set block time in Bitcoin is 10 minutes whereas in Ethereum, the block time is of 12 seconds.
2. Ethereum and bitcoin use different hashing algorithms.While Bitcoin uses SHA-256 algorithm that produces a number in hexadecimal format, Ethereum uses Ethash algorithm.
3. Ethereum uses a Ghost Protocol that fends off the use of centralized pool mining. Bitcoin still employs the pool mining concept.
4. The monetary supply. More than two-thirds of all available bitcoin have already been mined, with the majority going to early miners. Ethereum raised its launch capital with a pre-sale and only about half of its coins will have been mined by its fifth year of existence.
5. Bitcoin and Ethereum cost their transactions in different ways. In Ethereum, it is called Gas, and the costing of transactions depends on their storage needs, complexity and bandwidth usage. In Bitcoin, the transactions are limited by the block size and they compete equally with each other.
The purpose of Bitcoin and Ethereum is also very different. Bitcoin is created as an alternative currency or a cryptocurrency while ethereum is public blockchain platform for the execution of decentralized smart contracts. However, as mentioned earlier, Ethereum also has its own cryptocurrency called Ether which is comparable to Bitcoin.
While Bitcoin and Ether are both digital currencies, the primary purpose of Ether is not to establish itself as a payment – but to facilitate and monetize the working of Ethereum to enable developers to build and run distributed applications.
Some may look at both Bitcoin and Ethereum just as cryptocurrencies, but the reality is that they are vastly different projects and have different intentions. Bitcoin has emerged as a relatively stable digital currency, while Ethereum exploits the full potential of blockchain.
Ethereum for the longest time lacked a simple and convenient wallet, partly because of its small userbase. After the successful implementation of hardfork, we know that Ethereum is not like any other altcoin and it is here to stay.
Overtime the project has gained new developers to work on Ethereum based applications. As of now there are plenty of wallets to choose from.
Just like any other crypto based project has its own standard implementation and default wallet, Mist is supported by the Ethereum Foundation. It is an Ethereum browser capable of acting like a standard means of storing ETH and interacting with smart contracts.
You will need some basic coding skills in order to install Mist. It is available on Ethereum’s official site and at GitHub.
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