- 1 Who Created Ethereum?
- 2 What Are Smart Contracts?
- 3 Why Invest in Ethereum? How to Get Ethereum Coins
- 4 Ethereum Wallets
- 5 Ethereum Vs. Bitcoin
- 6 Ethereum FAQ
Except for occasions when it’s slightly beaten out by Ripple, Ethereum is the second most valuable cryptocurrency in the industry. Second in value only to Bitcoin, Ethereum commands a huge following, and has even created the altcoin market in its own image. Dozens of the top 100 crypto coins are ERC20 tokens – digital assets released using Ethereum’s technology. There’s so much more to say about Ethereum, both as a network and as a currency (though the currency itself is technically called “Ether”). We’ll explain it all, so you can know whether or not Ethereum is the right investment for you.
What Are Smart Contracts?
Smart contracts are one of the concepts that made Ethereum distinct from Bitcoin. Bitcoin is digital cash, plain and simple. However, Ethereum is a way of storing more than just financial data on a blockchain. Smart contracts are a kind of algorithm that performs a task within an application autonomously. Smart contracts, once initiated, will repeat their coded commands forever, without outside oversight. Theoretically, programs of any complexity could be composed and carried out by smart contracts.
Does the Name “Ethereum” Have a Meaning?
Vitalik Buterin explains the origin of the name “Ethereum” better than anyone. “I immediately realized that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel”.
What Does Ethereum Aim to Do? How Does Ethereum Work?
Buterin’s goal was and is to remake the Internet, and even human society itself, with smart contracts as a foundation. His smart contracts could be used to simplify corporate structure, eliminate workforce inefficiencies, automate any number of routine computational and service tasks, and increase market productivity without making untoward demand on human labour.
Smart contracts already perform countless functions within the Ethereum blockchain network, and institutions and businesses around the world are incorporating these autonomous applications into their workflow more and more each day.
What is a Decentralised Autonomous Organisation?
A Decentralised Autonomous Organisation is a business, institution, corporation, or other structure that is operated entirely by autonomous smart contracts and is made up of technologies and representatives spread out across the planet. Blockchain itself is a decentralised technology, with miners and users existing in every part of the world, with no centralised headquarters anywhere. When fully mature, Ethereum will be a decentralised autonomous organisation (or DAO, pronounced “dow”). Already, countless network functions are run entirely by smart contracts and artificial intelligence.
Notable Backers, Investors, and Supporters
There were many early Ethereum investors who aren’t publicly known, but the most prominent ones might surprise you. Joseph Lubin is a major developer and personality within the Ethereum ecosystem, and he was there from the earliest days. Tyler and Cameron Winklevoss bought in early as well, growing their crypto wealth with massive returns from Ethereum. Richard Sherman, of American football team the San Francisco 49ers fame, was also an early investor. Finally, none other than Ashton Kutcher caught wind of Ethereum’s incredible potential very early and invested deeply, reaping incredible investment returns in the months and years that followed.
Ethereum has many competitors, most of which came into being after it was already on the scene. On the one hand, Ether is competing against cryptocurrencies like Bitcoin and Litecoin. Ether was never meant to be used as digital cash, at least primarily, but people use it this way nonetheless. Ether can be used to pay for goods and services almost everywhere that Bitcoin can be used. Ether is also sold alongside Bitcoin, Litecoin, and Bitcoin Cash on Coinbase, so in the eyes of the public, it’s clearly competing with these cryptocurrencies, even though it is in a class of its own (Ether is a utility token).
On the other hand, Ethereum is competing against countless other smart contract platforms. EOS, NEO, Qtum, Cardano, ARK, ICON… the list goes on. Each of these protocols has a different plan for becoming the biggest smart contract platform in the world, and each would like to steal from Ethereum’s market cap and dominance to do so. Major competitors like EOS would like to leave Ethereum in the dustbin of history.
Again, it’s important to point out that Ethereum has the head start and the most impressive team of developer talent in the industry. On the other hand, newer smart contract platforms have the benefit of being able to come after Ethereum, observing its methods and mistakes. Ethereum constantly has to re-examine its foundations, while new companies can implement newer methods from the very start.
Ethereum Brokers and Exchanges
Because Ethereum is one of the top two or three cryptocurrencies in the world, it’s sold by just about every cryptocurrency broker and exchange that exists. Most of these even use Ethereum as a fundamental trading coin, a cryptocurrency against which all other coins on the site may be traded.
The biggest Ethereum exchange in the United States is Coinbase. Coinbase only sells the most prominent cryptocurrencies in the world (Bitcoin, Bitcoin Cash, Litecoin, etc.). Ethereum being included on Coinbase makes it highly visible to buyers all around the world, as buyers in many countries use Coinbase.
Binance is another large international exchange that sells Ethereum and uses it as a foundation for on-site altcoin transactions. See our Binance review for more general information about this exchange.
It would be pointless to try to name every crypto exchange and broker that sells Ethereum. Ethereum (ETH) is a global standard cryptocurrency, so it’s very rare that an exchange of this type doesn’t trade ETH in some form or fashion.
Ethereum is mined very much like Bitcoin and many altcoins. Ethereum miners use powerful computers called ASICs (Application-Specific Integrated Circuits) to perform the sophisticated mathematical functions that authenticate and secure the Ethereum network, and the people who operate these functions are awarded new ETH that have never been in the network before.
Ethereum mining can be very profitable, but it doesn’t seem to be a long-term solution for people who want to make money with Ethereum. The Ethereum network is moving from Proof of Work (Bitcoin-style mining like it has always used) to Proof of Stake (a consensus mechanism that doesn’t require mining and uses much, much less energy) in the coming months.
It’s recommended that if you want to get into Ethereum mining, don’t think of it as a long-term investment. Do your own research on Ethereum Staking, as this is the method of the future.
Ethereum Vs. Bitcoin
Check out our handbook to learn more about the difference between Ethereum and Bitcoin.
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