Everyone knows that Ethereum is the 2nd biggest cryptocurrency after Bitcoin, but there’s a catch! ETH is not just a currency. It is more than that. Let us discuss what Ethereum is and what makes it unique?
What is Ethereum?
Ethereum is a blockchain platform with its cryptocurrency called Ether. It also has a programming language called Solidity. It is a blockchain network that enables people to create decentralized applications. Its decentralized public ledger allows people to verify transactions and record them. Ethereum was built to enable developers to create decentralized applications (dApps) without the risk of fraud, interference, or downtime.
Ethereum is a programmable network that enables people to buy and sell digital commodities, such as games and apps. Like any blockchain, Ethereum is a database that is designed to be secure. Ethereum is a blockchain that enables developers to create decentralized apps and games. Its decentralized nature makes it ideal for developers wanting to create secure and commercial apps.
Features of Ethereum
Smart Contracts
The coding language of Ethereum, Solidity, is used to write smart contracts which run decentralized applications Dapps. In real life, every contract is dependent on “ifs” and “then”, meaning a set of conditions and actions.
A simple explanation would be:
If you pay rent on the 1st day of the month, the landlord allows you to use his apartment. It is precisely how smart contract works on this platform. The smart contract developers write the set of conditions and actions for the program or Dapps; the network executes it. If you have a smart contract to pay rent, then the landlord does not need to collect the money from you actively.
If you send the money on the due date, you will be able to use the apartment, otherwise, you will be locked out. These are known as smart contracts because they deal with every aspect of the contract performance, payment, management, and enforcement. Smart contracts are immutable, self-executing, and letter strictly.
Ethereum Virtual Machine (EVM)
If you want to write software and run them on the Ethereum network, you need a virtual machine. It is a system designed to operate as a runtime environment for Ethereum based smart contracts that is sandboxed and completely isolated, meaning code running inside the network file system and other activities is inaccessible to EVM.
EVM guarantees security by preventing denial of service attacks, interpreting and executing Ethereum programming language, and ensuring that communication can be achieved without interference. It enables developers to design decentralized applications with no downtime and without changing any of the created items. It eliminates the need for powerful hardware and software, making it a perfect fit for beginners.
The Ethereum Blockchain
The record of all smart contracts is stored in the Ethereum blockchain. If you send ETH to someone else, then the transaction data must be added to the block for the transaction to be successful. Since it is decentralized, hundreds of computers worldwide are storing a copy of the complete Ethereum blockchain.
Each computer is termed a node in the Ethereum network. Thousands of computer processes ensure that the user follows the rules every time a smart contract is used on the network. Ethereum node stores more than the transaction details. The network keeps track of the current state and information for all applications, including each user’s balance, smart contract code, and any updates.
To summarise, each node contains:
- Account each user can have an account that shows how much Ether the user has.
- Smart contract state
- Smart contract code describes the rules needed to be followed for money to be unlocked and transferred.
Ethereum Mining
Mining is a method by which new transactions blocks are created and added to the Ethereum blockchain. Transactions are mined in a very similar like Ethereum’s. Ethereum miners audit the transactions and verify their legitimacy.
The miners solve complicated mathematical equations by using powerful computers. After the equation is solved, the other networks on the same web provide their consensus. Then, the transaction is added to the chain. Hence a block of these transactions gets created, and this technology is known as the Blockchain.
Ethereum miners are rewarded with ETH for providing their technological resources for transaction verification. Ethereum uses proof of work as a confirmation mechanism. Mining is essential for proof of work. It ensures that anyone who wants to add a transaction to the Blockchain must solve a complex puzzle that requires a lot of processing power. Miners and nodes are responsible for transferring ownership from one place to another without any third party’s involvement.
Miners are the ones who prevent the bad behaviour by ensuring that no one is spending their money more than once at a time to cheat the system. Ethereum is shifting itself from proof of work to proof of stake. Proof of stake is a consensus mechanism type used by the blockchain network to achieve distributed consensus.
Proof of stake is better than proof of work ok with the following benefits:
- Better energy efficiency
- Low entry barriers
- Reducing the hardware requirements
Ether (ETH)- The Digital Asset
People think Ethereum and Ether are the same things. Still, the difference is that if Ethereum is a blockchain-based platform, Ether is the cryptocurrency used to run this blockchain-based platform. Ether is a cryptocurrency and is needed for doing anything on the Ethereum platform. Whenever Ether is used to execute smart contracts on the network, it is referred to as gas.
Uses of ETH
Ether is used for the following:
- Payments: Like Ethereum, Ether is also used for payments. Users can send it to another user just like cash, and this payment does not require any centralized authority.
- Fueling decentralized applications: Ether is required to use the Dapps
- Transaction’s fee: Every Ethereum action from using Dapps to payments requires a fee payment in Ether.
Price History of Ethereum
1 Ethereum was worth $4,160 in May 2021, and presently 1 Ethereum = $3,500, but have you ever wondered how Ethereum reached these new highs. Let us discuss the price history of Ethereum. Ethereum has one of the most volatile trading histories among the class of assets. It rallies and crashes very frequently. Ethereum is that asset in which double-digit incline and decline of its prices are very common. But how Ethereum started gaining so much popularity? Let’s find out.
2015-2017
In the initial days, liquidity was very low. There were only a few investors in the cryptocurrency market, and there were many price fluctuations. When Ethereum was found, its price was $0.71, and the first significant price change in Ethereum was in Feb 2016; it was trading at $6. 2017 was a decider in the history of Ethereum’s price.
At the beginning of 2017, it traded at $10 and then rapidly shot up to $70 by April. It re-accelerated with the same pace and went to $717 in December 2017. This intense bull run attracted numerous investors and helped Ethereum to gain the #2nd spot in the Crypto world.
2018-2021
The major event that created headlines and made Ethereum the centre of attraction was the price bubble of 2018 when it was trading at a $1366 all-time high. April 2018 to March 2020 was a rough patch for the Ethereum investors as the price was utterly moving in a range. By the mid of March 2020, the price already fell to $260.
But the table turned in 2020; the stock market crashed due to the pandemic; the Ethereum price is touching sky heights. A majority of people started to invest their money into cryptocurrency. From that time, the whole Crypto market rebounded from the loss and continues to make newer heights.
Ethereum and the cryptocurrency market are emotionally driven; any news or event in the outside world adversely affects the price. But what has happened in history will help us figure out how Ethereum will perform in 2021.
Ways to enter the Ethereum’s cryptocurrency market
There are two ways to enter the cryptocurrency world. The first is through mining. This process involves using various computer networks to generate digital coins. The second is through investing. Since there is no single authority present in cryptocurrency, it runs on the mechanism of Blockchain, which is truly decentralized.
Crypto is not only decentralized but also a distributed system. All transactions’ record (ledger) is available publicly and stored on numerous computers in a network in real-time. Now, you must wonder how the transaction is getting verified before getting added to the ledger? Cryptocurrency uses cryptographic algorithms for transaction verification rather than using a central banking system. To answer your query, this is where the miners come into action.
The people who run the system are known as miners. A lot of computing work is required to perform the calculations for each transaction. The miners use their computers to perform the calculations required to add a new transaction in the ledger. Various cryptocurrencies are available on any exchange. Investors can buy and sell them depending on their goals and objective.
Before starting trading, you must complete the necessary steps to establish a valid account and pay using a cryptocurrency exchange. This step includes the verification of your identity and other documents.
Trade Ethereum in India
The easiest way to invest in cryptocurrencies is by choosing a cryptocurrency exchange. This process involves four key steps. Aside from selecting a cryptocurrency exchange, there are also various ways to invest in Ethereum.
To trade or sell Ethereum coins, you need to open your account with any Crypto exchange. You can buy Ethereum on various crypto exchanges and can convert them into any other Cryptocurrency. After buying, you can also transfer your Ethereum to your wallet and keep your private key safe. Traditional (fiat) currencies can be used to convert and accept cryptocurrencies.
How to Trade Ethereum In India
Step 1:Open a Digita Wallet & Create a User Account
To begin, you must first create a digital wallet. A digital wallet stores all of your cryptocurrencies and communicates with other users via blockchain technology. A thorough study is required before deciding where to put your money. Today, BuyUCoin is one of the fastest and popular digital wallets on the market.
To register and open an ethereum trading account, go to the official BuyUCoin website. Create your crypto-trading account by selecting your country and agreeing to the terms and conditions.
Step 2: Complete the KYC
KYC is required in the Indian jurisdiction. Your information is protected and encrypted, and it is only stored in Indian data centers. You will be transferred to another URL to complete your KYC. A picture of your pan card is required. The mobile number associated with your Aadhaar is required.
Step 3: Verify with Google in two phases.
Download the Authenticator app to add two-factor authentication to your account. If enabled, you will be required to provide a 6-digit one-time password along with your email and password every time you log in to your account.
Step 4: Fill in the bank information.
Fill in the required information, including your name credentials, the account holder’s name, and the IFSC number.
Final Words
Cryptocurrency has been around for a decade, and it has already turned into a haven for investors. Its robust returns have made it an excellent investment option. Cryptocurrencies look fascinating and have huge potential, but you should always invest in ETH or any other cryptocurrency by researching properly and implementing your strategies.
*This post is provided for informational reasons only; we recommend that you consult with your financial advisor before making any investment decisions.