When the blockchain exploded on the scene at the beginning of the decade, few people noticed it. Then, when the value of cryptocurrencies like Bitcoin grew, everyone suddenly wanted a piece of the action. Ethereum offered different products compared to Bitcoin, but still based on blockchain concepts
What is a blockchain?
The blockchains are giant digital blow-ups where a transaction is linked to both transactions before and after transactions. The technology uses a computer consensus on a network that validates these transactions by solving mathematical problems. When these computers, known as nodes, solve a problem, the transaction is added to the ledger and a token or currency is assigned to the node.
His it is practically impossible to tamper with a continuous ledger shared among the participants. It also contains information that goes back to the beginning of the ledger, which allows industries along a supply chain to instantly verify all aspects of what they receive.
How does Ethereum work?
Ethereum aimed to establish itself as a platform for peer-to-peer contracts and for applications through its currency. The idea was to have a way to establish smart contracts that allow entities to trade anything from goods to services, not just currency.
Like Bitcoin, Ethereum uses consensus through computer nodes that solve mathematical problems for contracts added to the general ledger. In turn, these nodes (miners) are rewarded with Ether for their efforts.
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A brief history of Ethereum
Initially proposed at the end of 2013 by Vitalik Buterin, Ethereum was launched in 2014. It offered Ether as its main cryptocurrency through a crowdsourcing campaign. The initial sale led to $ 18.5 million and sold about 60 million Ether. In 2016, 50 million dollars of Ether were stolen by an anonymous hacker, who questioned the users of the profitability of the platform. As a result, the blockchain is divided into two currencies: Ethereum (ETH) and Ethereum Classic (ETC).
If you had bought Ethereum in April 2016 with $ 120 at the price of $ 15 per coin (8 coins), you would have seen your investment get up to $ 1,100 per coin at the start of 2018, just to see it collapse within months, at around $ 200 per currency.
How is Ethereum different?
Ethereum expands the concepts of Bitcoin by going beyond the digital currency and allowing uninterrupted transactions. Smart contracts allow integrated transactions for things like real estate and assets. Think of a real estate transaction and all the various actors involved, automated through a single intelligent contract.
Ethereum also allows you to build applications within your platform. This can lead to questions such as autonomous decentralized organizations (DAOs), organizations that do not have a single leader. Rather than a person managing the organization, the system is managed by consensus and a set of rules that govern. However, the main attack of 2016 led to a splitting of the currency and questioned the viability of the system.
How to buy Ethereum
If you are interested in investing in Ethereum Classic or Ethereum, you must follow these steps:
1. Decide your investment vehicle
There are two ways to invest in Ethereum or Ethereum Classic, directly and indirectly. The direct investment involves the purchase of cryptocurrency. The indirect investment involves the purchase of derivative vehicles such as futures, options or other commercial vehicles.
2. Determine the amount you want to invest
Consider that you are choosing to invest in something highly speculative and not widely adopted. Choose an amount to invest that takes into account this and your overall portfolio.
3. Find an appropriate broker
The type of broker you choose depends on how you want to invest.
- Derivatives: Unlike stocks, bonds and other commonly traded financial instruments, cryptocurrency derivatives are fairly new. You will need to look for which brokers offer the derivatives you are looking for.
- Direct investment: If you are looking to invest directly in Ethereum, you will have to do it use a specialized broker like Coinbase. These brokers typically apply commissions as a percentage of the total amount traded and vary widely by country and financial institution.
3. Create an account
Whether you're using traditional stockbrokers or a cryptocurrency broker, you'll need to configure and account for and provide information on how you intend to fund your account.
4. Fund your account.
Once you've set up an account, you'll need to transfer funds to your account. You can fund your account using everything from banks to Paypal.
5. Buy Ether
Note that commissions associated with Ethereum, Ethereum Classic or a derivative may vary from broker to broker.
What makes Ethereum unique are its integrated and integrated business contracts and the true potential of the blockchain.
Unfortunately, the other thing that makes Ethereum unique is that it has been violated. Although Ethereum is not alone in the problem, it is probably the most notable.
As the currency moves further away from the hacking event and gains more commercial adoption, we will probably see the cryptocurrency stabilize and lose some of its volatility.