What is Ethereum? All You Need To Know
Bitcoin is no longer the only cryptocurrency under the spotlight. Ethereum is now the second most popular cryptocurrency in the world, and it’s a pretty tough competitor for Bitcoin. But what exactly is Ethereum, how is it different from Bitcoin, and why do so many people support it? In this article, we’re going to give answers to all of these questions.
Who created Ethereum?
The first and most important thing that sets Ethereum apart from Bitcoin is that it has a real team of developers behind it. Ethereum was developed by Vitalik Buterin, a young programming prodigy from Toronto. Bitcoin, on the other hand, was developed by a certain Satoshi Nakamoto, whose real identity is unknown to this day. Bitcoin has multiple teams that work on improving and maintaining the network throughout the world, but there’s no real connection the actual developers – which makes people wonder what exactly was the purpose of creating it in the first place. Ethereum appeared as a reaction to Bitcoin, or rather, as an attempt to cover the blind spots in the Bitcoin technology. Vitalik Buterin worked on several Bitcoin projects before coming up with Ethereum as an improved version of Bitcoin.
How is Ethereum different from Bitcoin?
While the Bitcoin blockchain is just a P2P payment processing system, Ethereum is a decentralized platform that allows developers to build independent applications upon it. Many people like the analogy of Ether being a ‘world computer,’ or a global and decentralized platform for executing peer-to-peer contracts. This means that the Ethereum blockchain allows you to trade more than just money – but also property, stock, goods, or services, using a feature called smart contracts. Smart contracts are also the reason why it is so popular with corporations, as many big and small businesses have started running their apps on the Ethereum blockchain.
What are smart contracts?
Some like to think of them as vending machine protocols – you feed the machine a dollar, you enter an input to indicate the drink you want to get, and the machine will run through a set of operations to bring it to you. The same principle applies to Ethereum smart contracts, but instead, you have to fuel the transaction using Ether, Ethereum’s own crypto token.
Ether is one of the highest ranking cryptocurrencies right now, due to many developers building decentralized apps based on the Ethereum blockchain. These decentralized apps, or Dapps, for short, can be anything from payment networks like Bitcoin to voting systems, bank loans and more. Any system that is currently centralized can be decentralized by creating a Dapp on the Ethereum blockchain – meaning so many middleman fees and processing times would be cut out of the picture.
Why is Ethereum so popular?
These are the main reasons why Ether is gaining more and more popularity as a cryptocurrency. The other ones are pretty obvious if you look at a growth report. Ether has been growing at breakneck speed, way faster than Bitcoin and most other altcoins. In December 2017, the price of Ether has grown from $400 to $700, and it has already hit the $1000 landmark at the time of writing, in early January 2018. It’s still very volatile, and it can easily drop down as much as 25% in just a few hours, but that doesn’t discourage firm believers from investing and keeping their Ether.
How can you mine Ethereum?
Ether can also be mined using regular GPUs, which makes it an attractive niche for beginner miners that don’t have the money for an ASIC processor for mining Bitcoins. As long as you have enough RAM memory to support the Ethash mining process, you should be able to mine Ether on a regular desktop. However, Ethash will shift from a Proof of Work (POW) mining protocol to a Proof of Stake (POS) one in 2018, so it might be better to keep in touch with the news for now and start testing the waters after the change.
This is everything you should know about Ethereum as a beginner investor. To sum it up, Ethereum is an open-source and decentralized platform that allows developers to build apps upon it. It also allows people to trade more than just money using the smart contracts feature. Lastly, it can be either purchased or mined, but the mining protocol will shift from POW to POS in 2018.