How does Ethereum work? Is Ethereum a cryptocurrency? Who created Ethereum? Is Ethereum worth getting interested in? The cryptocurrency market is a new and unexplored phenomenon.
Reasons of Ethereum’s popularity and rise in value
Ethereum is the second most important cryptocurrency in the world, right after bitcoin. It is also an open-source distributed software platform based on blockchain technology. It supports P2P (peer-to-peer) network contracts, where each node – the user – is equal in hierarchy.
Ether is the virtual currency of the Ethereum network, with which users of the network pay for transactions between users. There are also smaller units: finney (0.001 ETH), shabo, shannon, babbage, lovelace and the smallest unit: wei. Each of these is worth one thousandth of a higher denomination Ethereum unit.
How does Ethereum work?
As a peer-to-peer network (consisting of the same units – computers), Ethereum consists of an elongated chain of blocks. Each block is made up of individual nodes called miners or diggers. You can exchange ETH to SOL on Changelly.
Each block has a pool of yet-to-be-processed transactions that are processed by the miners’ computers. The processing of each transaction is linked to a payment denominated in Ether. Miners, with spare processing power, select the transactions that are worth the most.
The Ethereum system generates new ether to reward nodes (miners) for their contributions to the blockchain network. This assumption defines the fundamental difference between the ETH cryptocurrency and BTC (bitcoin). The supply of ether is unlimited, as is the constantly evolving structure of the blockchain network. Ether, unlike bitcoin, is subject to the laws of inflation.
Is Ethereum a cryptocurrency?
Ethereum is a blockchain network platform where transactions are made and then rewarded with a cryptocurrency called Ether (ETH).
Who created Ethereum?
One of the founders of Ethereum is Vitalik Buterin, a programmer with Russian-Canadian roots who was also behind the creation of Bitcoin magazine. The concept of the system was first described in 2013, and work on the platform’s software began in 2014. Behind them was a Swiss software company: Ethereum Switzerland GmbH.
That same year, it was announced that Ethereum would be developed by the nonprofit Ethereum Foundation. The first source of funding was a crowdfunding campaign. It was also possible to exchange your bitcoin holdings for ether at an attractive rate.
Many reputable institutions with real influence on the global economy have shown interest in Ethereum. In 2017, the Enterprise Ethereum Alliance (EEA) consortium was created, bringing together 30 major technology (including Microsoft and Cisco) and financial (JPMorgan and MasterCard) companies to work on the further development of the platform. The EEA currently includes more than 150 companies.
Should I be interested in Ethereum?
Ethereum is undoubtedly the cryptocurrency of the future. Constant changes in the code to improve scalability and the involvement of serious financial institutions suggest that Ethereum will maintain its leadership position in the altcoin ecosystem and will come on the heels of its main competitor – bitcoin.
Everyone is also looking forward to major changes in the platform, moving from Proof of Work transaction confirmation to Proof of Stake. Without going into details and technical aspects, the idea is that once a certain critical mass is reached, the creation of new blocks and their further creation will become very difficult. Once the so-called complexity bombs (a planned feature of the system that changes the transaction confirmation system) are triggered, digging Ethereum will become very difficult.
Extreme caution is advised when investing. While the prospects for Ethereum are very positive and the listing should go up, equally important is the real inflationary factor that devalues the ETH exchange rate. Nevertheless, public acceptance of virtual currencies as a reliable means of payment continues to grow, which could have a positive impact on the valuation of all cryptocurrencies.
The cryptocurrency market is a new and unexplored phenomenon. We already know examples of impressive drops in the price of BTC, and we cannot assume that there will be nothing similar with ether quotes.