Digital currencies are becoming increasingly popular due to their massive return on investments. They are not printed cash or coins - instead, they are files stored in the cloud. You can buy them, sell them, or hold them. These currencies are highly secure decentralized, and transactions are verified by a network of users rather than banks or governments. They are not subject to the whims of politics or the economy. In this post, we endeavor to tell you all you need to know about such a digital currency called Ethereum.
What Exactly is Ethereum?
Invented by a Canadian-Russian programmer called Vitalik Buterin, Ethereum is the second biggest cryptocurrency by volume globally. It is a programmable distributed blockchain invention that allows participants to transact through peer-to-peer networks called small contracts. By distribution, it implies that participants can view former transactions (blocks) in the primary public ledger.
Ethereum uses blockchain technology and a virtual currency, ether, to facilitate transactions and rise in value. It has been described as a second-generation internet that can codify, decentralize, secure and trade just about anything. The platform was initially designed for developers to build and deploy decentralized applications.
Ethereum is more than a digital currency and is a network platform. The platform allows software developers to build applications that make the sale and storage of the cryptocurrency easier and faster. The applications run as programmed without any chance of downtime, censorship, fraud or third-party interference. You can also make payments, borrow or lend cryptocurrency using these applications. Participants use small contracts to initiate transactions on the applications.
Smart contracts are far better than traditional lending systems from processing time, lower fees and zero bias or human errors. This peer-to-peer lending benefit is the main attraction of this cryptocurrency to many people.
What is Ethereum Used for?
Crowdfunding is a means of raising money from different people geared towards a specified cause. Ethereum is the most preferred initial coin offering (ICO) for people looking to fund their blockchain inventions. Due to its global nature, participants from anywhere in the world can invest in a particular business despite varied locations.
The small contracts are programmed vending machines that automate transactions using a blockchain community. As such, members can save, borrow, and invest without needing a financial institution or a central authority to verify transactions.
Storage of Wealth:
Political interference and global inflation bring about the fluctuation of traditional money systems. However, digital money is free of such occurrences, making it a good storehouse for your wealth and livelihood.
Decentralized Autonomous Organizations (DAOs):
DAOs run without central authorities but instead rely on the community members and stakeholders for their governing. Since DAOs are open-source and community-based, Ethereum is an excellent platform to raise funds and code administrative decisions.
Non-Fungible Tokens (NFTs):
The NFTs are indivisible digital currencies that help prove and safeguard artists' and gamers' work. Typically, the information is coded on the blockchain and allows interoperability, especially on gaming platforms. Perfect examples are CryptoKitties and Gods Unchained, which would enable gamers to have full ownership of gaming items.
Is Ethereum better than Bitcoin?
The emergence of Ethereum was to better the functionalities of Bitcoin. Bitcoin allows participants to make digital currency transfers only and nothing more. On the other hand, Ethereum will enable participants to secure transactions of virtually anything since the transaction is transferred into a code on the blockchain. Moreover, it has a platform that allows developers to build applications for their currency, a feature that lacks with Bitcoin.
Bitcoin has the advantage of being a first-mover digital currency compared to all other digital currencies. Ethereum is also facing stiff competition from new entrants such as Solana, Avalanche, and Cardano are running smart contracts.
Is Ethereum a Good Investment?
The digital currency market is highly volatile and a speculative investment for all. The popularity of Ethereum has led to higher fees and slower mining. As such, it has seen the prices sharply drop over the past few months. Nevertheless, the company is working hard to overcome the challenges experienced. Therefore, we expect to see the coin stabilizing and its demand souring even more. Due to these reasons, investment in this digital currency is worth your money.
Can I mine Ethereum for Free?
Mining is adding transaction records to the blockchain but requires a lot of computing, time and electricity. You can mine the digital currency simply by using your computer's processing power unit (CPU). However, it takes a lot of time and may not be as profitable.
Nowadays, you require specialized equipment such as graphic processing units (GPUs) and application-specific integrated circuits (ASICs) to mine cryptos. However, these hardware components might cost you a fortune to purchase. You may also opt for cloud mining or pool mining to mine the currencies on a large scale for better profitability.