What is Ethereum (ETH)?
What is Ethereum? Is it just a cryptocurrency or something more within the crypto industry? Let's answer these questions.
Ether is the second most popular cryptocurrency in the world, created as an exchange unit on the Ethereum network, a platform for creating decentralized applications based on smart contracts.
What are smart contracts?
Smart contracts are essentially algorithmic instructions written into the blockchain for the system to act when it (or the participants) reaches certain conditions.
In simple words and an example - let's say you have been keeping funds in the bank at interest for many years and want to immediately buy a tour to the Maldives for your mother-in-law after accumulating a certain amount. So, a smart contract (an entry in the blockchain) will work according to plan, automatically checking your bank account daily. Having received information on the availability of the necessary funds, the contract will fulfill the conditions prescribed therein - find a tour that fits the criteria specified in advance, purchase it and register it for your relative, additionally sending tickets with congratulations to your mother-in-law's email address (provided, of course, that you specify this in the contract actions to be fulfilled).
History of the creation of the Ethereum cryptocurrency
The Ether cryptocurrency, the exchange currency on the Ethereum network, is the world's most popular Altcoin, with a market capitalization of over $370 billion (as of March 2022).
Who created Ethereum?
The Canadian-Russian programmer Vitaly Buterin (better known online as "Vitalik Buterin") proposed the Ethereum algorithm and concept as an alternative to Bitcoin in late 2013. The founder and former editor of Bitcoin Magazine developed a model of the Ethereum system and launched the network on 30 July 2015 - this is the Ethereum creation date.
Vitalik is believed to have found out about Bitcoin's existence 2 years after its appearance (that is, in 2011) and got excited about creating his own cryptocurrency. Dropping out of his studies at the University of Waterloo in Waterloo, Ontario, Canada, Buterin plunged headlong into working on Ethereum blockchain projects. Since then, the network's founder has gone from average Canadian student to a "genius, billionaire, philanthropist", and his brainchild (one of them) - the Ethereum cryptocurrency - has experienced both ups and downs but has clearly shown its character.
The Unicode of the Ethereum symbol, Ξ, has become another recognized mark of the entire cryptocurrency community.
To understand the "nature" of Ether, just look at the rise in its price in dollars from its initial launch on the Kraken exchange in August 2015 to the present. In its first 10 days as a traded cryptocurrency, for example, Ether was worth between $0.68 and $2.77, stabilizing at $1.8 per ETH. Now, Ethereum 2022 is worth $1.570 for 1 ETH. Thus, since its inception, Ether has risen in value by more than 1,000 times. It would be fair to say that, for both investors looking to appreciate and traders taking advantage of the asset's volatility, Ether serves as more than a fortunate enrichment tool.
ETH emission rate is not limited by quantity but adjusts to the needs of the ecosystem created on the Ethereum blockchain.
How does Ethereum work?
As mentioned, Ether was created as a unit of exchange on the Ethereum network. This means that the main purpose was to use the currency as payment for transactions on the network and to perform smart contracts. Subsequently, after entering the exchanges, the cryptocurrency received a fully-fledged status of an exchangeable asset.
The special feature of Ether transactions (transfers from wallet to wallet and payments for purchases such as NFTs) is the transaction fee, called gas. The gas price is calculated in Gwei units, the value of which is determined by world market conditions according to the principles of the Ethereum network. To transfer funds in Ether, you need to pay a certain amount calculated by the market and the network but not by the crypto exchange. For example, EXEX does not charge commissions or any other fees for Ether transfers, and network fees are calculated solely by third-party services owned by the Ethereum network.
Prospects for Ethereum blockchain and cryptocurrency
The successful development of cryptocurrency, the growth of its price, as well as the prospects in terms of investment and trading are determined by the following factors and conditions:
- The crypto asset is very competitive, as evidenced by its capitalization level (2nd place after Bitcoin).
- The Ethereum network is developing and modernizing, which means the improvement of its algorithms and, as a result, the potential attraction of new investors and buyers.
- The network's popularity as a tool for building decentralized applications has shown exploding growth in recent months.
- The increased use of smart contracts and their introduction into everyday life has meant a growing demand for the system's technology. For example, Belarus became the first country in the world to officially approve the legal validity of smart contracts.
- Growth in demand for NFT products on a global scale. To understand the importance of the moment, it should be noted that NFTs, as such, exist based on Ethereum technologies, and all payments are made in Ether (as well as payments for transactions on the network).
- According to the average estimates of experts, 2022 is the year when the cryptocurrency boom will begin. More and more countries are showing interest in cryptocurrencies, assigning official statuses to them and recognizing them as legitimate tools in the financial sector.
- Investing capital. The instability of the global economy is causing a massive outflow of capital into alternatives for traditional ones. It makes sense that the world's second most important cryptocurrency would attract increasing waves of incoming investments.
An additional incentive to form your attitude to Ether could be the fact that giants such as Microsoft and IBM, Lufthansa, and S7, as well as a huge number of banks around the world, show interest in the Ethereum platform and use its technological solutions.
The Ether (ETH) cryptocurrency, traded on EXEX, is in its formative stage as a means of payment on a global scale when compared to traditional currencies and their centuries-long history. However, Ether has, in a relatively short period of 7 years, demonstrated not only its exceptional validity as a financial instrument but also as a very attractive project for investment.
The development of cryptocurrency trading and the growing interest in Altcoins is shaping a steady trend of cryptocurrency adoption in all areas of modern life. To benefit from trading cryptocurrencies, including Ether, you need to trade responsibly - study in detail all the information about the projects, their developers, potential risks and opportunities, interpret indicator signals correctly (read "How to trade with RSI indicator") follow the news and apply technical analysis knowledge in practice.
ETH currently holds its rightful place in the list of traded assets on the EXEX platform, as you can see from the information in the article. For a fuller understanding of the crypto market, you can also explore other articles on our website, such as "What is Bitcoin (BTC)?"