How Does Ethereum Work?

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The significant growth of the revolutionary invention and the second biggest digital currency, Ethereum (ETH) wasn't unnoticed, making a lot of people ask questions such as "What is Ethereum?", "How does Ethereum work?", and "How can I obtain Ethereum?" In the next several paragraphs, we will explain how Ethereum works in general and what is the difference between Ethereum (ETH) and Ethereum classic (ETC).

Ethereum

Ether is the main cryptocurrency of Ethereum, a decentralized platform which is known for being able to execute peer-to-peer "smart contracts". Near the end of 2016, and as a result of a huge attack to the DEO, Ethereum had to be split into two: Ethereum (ETH) and Ethereum classic (ETC). The platform was created by famous Russian-based programmer Vitalik Buterin and launched in the summer of 2015. As the launch of the digital market was quite successful, many believed that this platform would be the next generation digital currency and decentralized app platform.

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Ethereum current market cap is $30,115,286,421 USD, (the up-to-date info can be found on CoinMarketCap ). Besides the mentioned cryptocurrency, peer-to-peer smart contracts are the most important elements of this decentralized platform, being unique to Ethereum. The important characteristic is that it allows users to code contracts without the interference of any third party. In general, Ether is mostly known for being the first ever alternative currency to Bitcoin.

How does Ether work?

Ether is the official digital currency of the Ethereum network and it's is quite different compared to Bitcoin and other altcoins, as it wasn't originally made as a currency for financial transactions. It was actually made as the main element to power up the Blockchain technology. This means that all those who use the computing power to confirm transactions or simply support the development of Blockchain are being rewarded with ETH. In some way, there are certain similarities to the Bitcoin mining. However, those who want to execute some specific operations on the Ethereum blockchain have to pay in ETH to start doing it.

The ETH represents the chain that has implemented the hard fork, trying to reverse the huge DAO hack which was mentioned earlier. On the other hand, the alternative to Ether, Ethereum classic, carries the name ETC, and it runs on the older Ethereum Blockchain, which operated before the hard fork, acting just as if the DAO attack never happened.

The presale of this digital currency made 60 million ETH for those who supported the project development and another 12 million to the Ethereum development fund.

Difference between Ethereum and Bitcoin

The first ETH was made as a part of crowdfunding effort in 2014. The presale of this digital currency made 60 million ETH for those who supported the project development and another 12 million to the Ethereum development fund. Moreover, 5 ETH were made for each block that has been mined. It means that the initial supply of Ether was around 72 million. According to the upper limit, around 18 million ETH can be printed per year.

Development of Ether price

As the digital wallets for storing cryptocurrency are still quite anonymous, it is difficult to predict when the demand for some currency will grow and even harder to guess when the price will change, whether it's falling or rising. Since Ether entered the market as a tradable asset in 2015, it suffered a substantial volatility when it comes to its price. At the beginning of 2016, ETH had a nice rally, rising from less than $1 to more than $10 in just two months. Later in April, ETH hit the record high of $21.50, but the huge DAO attacked happened suddenly, and the amount of 50 million was the subject of theft.

Due to that huge crash, the price of Ether halved within hours. Since this event, the price of ETH varied somewhere between $10 and $15 for a longer period, but after the consolidation period, the price started to rise again. Since the 50% Fibonacci hold in late 2016, Ether price continued to rise, going from the $7.00 to around $50.67 in just four months. In April 2017, it hit the new record of almost $80, which was just a beginning of a long and successful rally. The next month, ETH price continued to rise steadily, reaching the new record of $394.66 in June. This currency still has the best period in its short history of existence. By November 2017, the price had few changes, but in general, it was around $320.

So, what could be the reason for this amazing rally of Ethereum? Many analysts see several different reasons for it, such as the support of large corporations, the growth of demand, investment demand rising, its technological power, and its network effects.

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