How Does Ethereum Work?

How Does Ethereum Work?

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.

Our top trading bots

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currency of the Ethereum network and it's is quite different compared to Bitcoin and other altcoins, as it wasn't originally made as a currency for financial transactions.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.

Best Crypto Trading Strategies
What Is Trading Strategy And Why Is It Important? When it comes to cryptocurrency trading, having a full-proof strategy is essential. As most crypto markets...
Studying Time: Top 10 Books About Bitcoins and its Ilks
You live, and you learn, – teaches the old saying. It remains relevant especially in the era of emerging technologies, and it is not an exception when...
7 Things You Can Do with Blockchain
According to Gartner’s Hype Cycle 2017, blockchain technology is among those that promises us a bright future. By this stage, everyone has heard about...
What is Blockchain Technology and How Does it Work?
That’s why imagine blockchain as a technology that keeps track of every digital transaction that happens online, whether it is an exchange of goods and...
What is Bitcoin Mining and How Does it Work?
As suggested by the secretive bitcoin founder, Satoshi Nakamoto, the purpose of bitcoin is to create the decentralized way to exchange the digital assets...
Can Blockchain Technology Change the Finance World?
As the most innovative technology of modern days is carving its path into the world of business, finances, and various types of industries, many pose the...
How to Store Bitcoins and Other Cryptocurrencies?
Cryptocurrency may be the safest instrument for transacting values between anonymous users. However, storing and trading cryptocurrencies can be quite...
Ethereum Proof of Work vs. Proof of Stake
All the miners, BTC holders, and cryptocurrency traders have to encounter the terms " proof of work " and " proof of stake " at some point. These two...
How to Accept Bitcoin for Your Small Business?
As Bitcoin is now widely known for having numerous advantages in the modern-day business and finances, many small businesses are considering including...
How Exactly Do Bitcoin Transactions Work?
Bitcoin transactions are digitally signed for security and are sent to bitcoin wallets. For this to happen, your bitcoin wallet and a bitcoin network should...
How to Buy Litecoin in 2018
Litecoin is an altcoin and a cryptocurrency that has always been present at the very top of the most powerful cryptocurrencies list, constantly holding...
Creating a Bitcoin Paper Wallet
Cryptocurrency wallets usually consist of two keys. A public key represents user's wallet address on which other users send Bitcoins. A private key is...
How to Start Mining Bitcoins?
When it comes to traditional currencies (USD, EUR), governments simply print more money when it is needed. However, in bitcoin world, money is not printed...
How Can I Sell Bitcoin?
As Bitcoin is volatile, and its value changes all the time, once you hit the right price and sell it, your Bitcoin wallet may contain less funds than before,...
Satoshi Nakamoto, the Founder of Bitcoin
Satoshi Nakamoto is the name that stands behind the unknown person or group of people who created Bitcoin and its original implementation. As the part...