Ether (ETH), the Ethereum blockchain token, is among the three best cryptocurrencies in the world. It has the second-highest market value of $310 billion, at about half Bitcoin's market cap, but ahead of Binance Coin's $62 billion market cap.
Ethereum has two functions: first, it operates as money, and second, it can be used as a store of value. Ethereum usually serves as a decentralized finance highway. Users can use Ether, the Ethereum-related cryptocurrency, to interact with the site or acquire and hold it as a store of value. Developers widely utilize Ethereum, but some people also invest in cryptocurrency since it can grow in value over time.
It is a decentralized computing platform network that is open-sourced. Generally, the network is based on blockchain technology, which is a digitized public ledger at which monetary transactions may be validated and kept solely by software - with no need for a third party's involvement. The Ethereum network can be thought of as a secure database that is available to everybody. New data "blocks" are cryptographically "linked" to a source block when they are added, thus creating an unchangeable record of the prior changes.
Proof of work is the name given to the cryptocurrency mining process. Ethereum developers, aim to use a different approach called proof of stake, which makes mining more accessible and uses less energy. But it is the network's ability to accomplish more than just process financial transactions that makes Ethereum so appealing to users and enthusiasts. Ethereum extends the Bitcoin blockchain by allowing programmers to create "smart contracts" programs that host any decentralized application (referred to as "dApps").
The history of Ethereum
Vitalik Buterin conceived about Ethereum and published an initial white paper on the concept in 2013. The primary aim was to develop a decentralized and programmable platform based on Bitcoin's blockchain technology. Beyond its inception, here are a few notable moments in Ethereum's history:
1. In 2014, Ether became available for purchase for the first time, with users purchasing 2,000 ether for one bitcoin. The Ethereum blockchain went public the following year.
2. In 2016, the decentralized autonomous organization (DAO) hack resulted in a debate about whether or not people should be compensated for their losses. The upshot of the DAO fork is Ethereum Classic, which is a continuation of the original blockchain and Ethereum.
3. Popular dApps, such as the CryptoKitties game, were released in 2017. In that same year, the price of ETH surged from roughly $8 to over $700.
4. In 2021, the London hard fork introduces several significant modifications, including EIP-1559, which decreases the supply of Ether and makes network fees more reliable.
How Ethereum works
The network of Ethereum is powered by computational power. In essence, this means that individuals and businesses use their computers to execute specific nodes or software. Anyone can set up and run nodes on their PC. The Ethereum network relies on the node operators to perform transactions. To run the technology and software required to facilitate the transactions, these operators charge a fee. The costs keep the Ethereum network functioning and are thus termed as gas fees. They are also paid in ETH (Ether).
Consider the various applications for which a considerable computer network could be put to use. Ethereum uses the computer network for powering peer-to-peer business transactions and tracking who owns the ether cryptocurrency, the same way Bitcoin does. On the network, developers can also construct and run dApps. Smart contracts are like computer programs and not actual contracts in the classic sense, and connect the dApps to the Ethereum blockchain. Smart contracts usually are mini-programs that may self-execute when specific circumstances are met. They are stored on the Ethereum blockchain.
Simply put, the dApps are the program's front-end, and the smart contracts are the program's backend. Furthermore, dApps rely on the Ethereum network, which is open-sourced and decentralized and cannot be controlled by a single party. In reality, once a dApp is introduced to the Ethereum platform, it cannot be removed, even if the primary developer wishes to do so.
Users are allowed to utilize dApps under a pseudonym due to the decentralized system's privacy. Third parties, such as governments and corporations, may have less authority and cannot censor as a result.
Ether vs. Ethereum
Generally, Ethereum and Ether are similar but not identical. Ethereum is typically the technology, while Ether is usually the actual cryptocurrency. In other words, Ether is the Ethereum network's actual 'currency' or fuel.
Ethereum can be purchased on a cryptocurrency exchange if you need to invest in it. You might be able to purchase other things with Ether, just like you might with bitcoins or other cryptocurrencies. Ether may also be used as a "store of value”, the same way you could purchase gold and hold on to it.
Investing in Ethereum
You'll need a digital wallet that is linked to a cryptocurrency exchange if you are interested in investing in Ethereum. Ethereum isn't traded on any major stock exchanges, nor can you buy Ethereum via your online bargain broker. You'll need to put it in your digital wallet.
It's vital to remember that Ether (ETH) is a currency and that investors should handle it. Ether is not purchased in a similar way to stocks. You exchange dollars for Ether tokens. Once you make a purchase, there are no payouts or dividends. Your sole hope is that other individuals on the Internet will pay you more than what you spent on your Ether tokens soon.
In case you are not yet sure about using a digital wallet, you can invest in Ethereum directly on eToro. You can also purchase Ethereum on several other platforms such as Kraken, Uphold, Voyager and Binance.
Ethereum transaction costs
The Ethereum average transaction fee is measured in U.S. dollars. It measures the average cost of Ethereum when an Ethereum transaction cost is processed and confirmed by a miner. During moments of network congestion, the average Ethereum transaction fees can skyrocket as they did in 2017 to early 2018 crypto boom, when they reached around 30 USD.
The average transaction fee for Ethereum currently is 6.514, up from 1.106 a year ago. This is a 488.8 percent increase from a year ago.
Selling Ethereum and cashing out.
Once you have Ethereum, you can sell it in the same way you bought it. You can simply put a sell order on a cryptocurrency exchange, such as Coinase or Binance. It is crucial to remember that you don't necessarily have to sell your Ethereum for cash. You can sell ETH and receive other cryptocurrencies such as Bitcoin.
Transferring and storing of Ethereum
It's a brilliant idea to take your Ethereum (ETH) off the market and keep it in a digital wallet where you have control once you've purchased and invested in it. There are various reasons for this.
Why should you keep your Ethereum in your wallet? To begin with, if you store your cryptocurrency on an exchange, you are likely to lose control of your private keys. Additionally, there have been numerous allegations of exchanges that have canceled accounts without any warning. Such an occurrence could trap you and prevent you from accessing your crypto. You can avoid this and take complete control of your money by transferring your Ethereum to your wallet.
However, there is a major drawback to this. If you wish to transact more through buying and selling, you must either sell your ETH on an exchange platform or buy it and then transfer it to your wallet. Moving it to your wallet could, however, cost you an associated fee. It is your call to decide whether the extra step is worthwhile in terms of security.
Ethereum is a decentralized platform built on blockchain technology. The Ether cryptocurrency is the "fuel" that powers the Ethereum network, and you may buy Ether to invest in it. Investing in Ethereum is a risky affair, but it could be profitable in the long run. Unlike Bitcoin or Litecoin, businesses are adopting Ethereum as a building block, similar to diamonds rather than gold.
This is a win-win situation for investors. However, before you invest in any digital currency, be sure that you have done your homework and aren't taking on more risks than you're ready to take.