I have been fascinated by crypto for a long time now, and I enjoy sharing what I have learned about it on ToughNickel.
What is Ethereum?
Like Bitcoin, Ethereum is a technology that lets you send cryptocurrency to anyone for a small fee. Unlike Bitcoin, it also powers applications that everyone can use, and no one can take down.
Ehtereum is more than just a way to send digital money without payment providers or banks, it's a global, open-source platform for decentralized applications (DApps). In short, Ethereum is the internet of the future.
The main goal of Ethereum is to be an open internet. We can use internet services for "free“, but we are giving up personal data in the process. Ethereum services are open by default and work without any personal info. At the moment you often depend on third parties in the internet, if you want to share your files with someone, as example, you will need a service provider like Dropboxx, but with Ethereum users would be able to share/rent/use each other’s files directly.
The network brought us Smart Contracts, which enable decentralized finance (DeFi). Right now, our finances depend on institutions and banks, who can abuse their power to manipulate the market, DeFi aims to change that. Unlike our current financial system DeFi never sleeps or discriminates. If you want to send, receive or borrow money on the Ethereum blockchain then you only need an internet connection and a crypto wallet.
The blockchain is a booming digital economy with an active community that keeps expanding and creating new tools and services. Someone somewhere right now is building a decentralized business from scratch on this network. 10 years ago this couldn't be done.
What are Smart Contracts?
A smart contract is like a set of rules that lives on the blockchain for all to see and run exactly according to those rules. Once the rules are set up nobody can change them anymore, not even the people who made the code.
Imagine it as a vending machine; if you pay enough you will get the item you want, and the vending machine will hold the money until it gets collected. A smart contract is a vending machine that holds funds until both sides of the contract fulfill their part. This allows the code to mediate agreements and transactions.
To truly decentralize all aspects of our society we will need a framework that ensures trust among participants. Without smart contracts, two parties cannot interact securely with each other without a third-party service ensuring both participants get their share of the deal.
Today, if you use an escrow service, you don't need to trust the other participant in that transaction, but you do need to trust the escrow service provider. With smart contracts and a tokenized economy, you could simply transfer a tokenized version of your asset to your neighbor or a stranger on the internet in exchange for a certain amount of crypto.
A smart contract would make sure that your tokenized asset is transferred to the other participant as soon as they make the payment. If you apply this same principle to public transportation, supply chains, and the economy in general, there is a lot of need for an Ethereum-like platform.
What is ETH?
Ether (ETH) is Ethereum’s native currency. It is decentralized digital money that you can use on the internet. ETH is what fuels and secures the Ethereum network. Anytime you send ETH or use an Ethereum App you pay a small fee in ETH. This fee is an incentive for miners to process what you are trying to do. Miners confirm everything that happens on the blockchain and get rewarded with a small amount of ETH for doing that.
Other than fueling Ethereum and it's DApps, ETH is also used as an investment or a store of value, like Bitcoin, that is because the creation of new ETH slows down over time.
Where can I buy and store Ether?
You can buy ETH on pretty much every crypto exchange. Just be sure that you use an exchange that actually lets you send your crypto to an external wallet otherwise you have no real control over your tokens. Coinbase and Binance are good examples for an exchange.
Since ETH are decentralized and aren't controlled by any government or company, you are the only one responsible for your money. If you hold a huge amount of ETH than you shouldn't keep it on an exchange because exchanges are a likely target of hackers. If you want to be safe, then you should hold your ETH in your own hardware wallet.
What is the future of Ethereum and ETH?
The Ether price has recently been booming. In December 2020 it was trading for about $500, now at February 2021 it's trading for about $1,400. The price nearly tripled in the last few months! Such an aggressive growth will likely not continue forever. But since the Ethereum network is growing and more and more people and institutions pay attention to crypto, Ether will likely keep going up during the next few years.
Nonetheless crypto currency could be a risky play because we cannot know if the government will enforce regulations against it. So, like with every investment you never invest more than you are willing to lose.
If you want to invest in crypto and are willing to take the risk, then ETH should definitely be high on your watchlist.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2021 Krypton Currency