Ethereum is a distributed ledger created by a team of developers, including Vitalik Buterin. The system runs simultaneously on hundreds or thousands of computers and servers located all over the world.
This makes the network invulnerable to attempts to shut it down or ban it. Even if a few dozen or even hundreds of computers are disconnected from this network, it will continue to function. In terms of technology, Ethereum is very similar to Bitcoin. However, the functionality of Ethereum is much broader. It is possible to create your own smart contracts and even applications based on Ethereum. Programs of varying complexity are launched here.
Ethereum is used as a platform for various projects. For example, trading platforms or financial services are created on the basis of this network and various standards. Recently, NFT (non-interchangeable tokens), which are also created based on one of the Ethereum standards, ERC-721, have been gaining popularity.
At first glance, the Ethereum cryptocurrency seems similar to Bitcoin. And the only difference is that the latter is more expensive and appeared earlier. However, despite the fact that both tokens are based on the blockchain, they have a lot of differences.
If you choose between bitcoin and ether in terms of investment, both have different potential. Therefore, we suggest comparing these projects so that potential investors understand the difference between them and can choose what to invest in.
Bitcoin appeared in 2009. As conceived by the author, it was supposed to be a blockchain-based settlement system with data encryption in a decentralized network. As a result, bitcoin has become an alternative to fiat currencies such as the euro, dollar, and even the ruble. Today, it is accepted for payment in many stores, as well as by entrepreneurs providing various services.
The goals and objectives pursued by Buterin and his associates were completely different. The Canadian programmer with Russian roots did not strive to create another means of payment. Ethereum cryptocurrency is rather a spin-off, but a very successful one. The goal of the project is to create a platform on which in the future it will be possible to create various applications on the blockchain or write smart contracts that will regulate relations in the digital economy in the same way as it happens in the real economy today.
Despite the fact that Ether has taken root as a means of payment and looks competitive in comparison with Bitcoin, this is far from the full potential of the project. Of the features, the following can be highlighted:
- Users can create smart contracts within a distributed ledger. In this way, the process of verifying that the parties have fulfilled their obligations is shifted to the blockchain. The need for intermediaries like lawyers in some cases disappears. There is no way to correct or distort the information in such a contract.
- The network's open source code is used to create applications. Despite the fact that Bitcoin also plans to implement this opportunity, today the blockchain of the first cryptocurrency is less functional.
- Ethereum implements a special virtual machine that allows you to release applications in any programming language. Users don't need to create a new blockchain to launch projects.
- Finally, many ICOs are launched on the Ethereum network. At the same time, the Ethereum blockchain is used by them as a working tool that does not need to be paid for. Compared to Kickstarter, where 10% of the collected funds are charged for services, no such fees need to be paid on Ethereum.
The answer to this question lies in the same plane as the answer to the question of what is the difference between Bitcoin and blockchain. Ether is Ethereum, but it is not entirely correct to equate ethereum and ether. Ethereum is, first of all, a technology. And it is much broader and larger than the ether cryptocurrency.
Details about the main features of the Ethereum network
In the process of creating a distributed ledger of Ethereum, the developers took into account all the difficulties faced by programmers who worked with the blockchain. That's why they decided to make a simplified system that would allow them to quickly deploy any applications in Ethereum. The truth is that the ability to create smart contracts is still not available to ordinary users due to the fact that it would require programming skills. So, there are already projects in Ethereum that make this process much easier.
By these we mean program code. They are called "smart" because it is not just a contract, which stipulates the terms of the deal. This is a program that makes sure that the rules set in the contract are followed.
The emergence of smart contracts in Ethereum was preceded by the work of Nick Szabo, who proposed the concept back in the 90s. Smart contracts allow you to determine the conditions under which certain actions are performed. For example, a programmer can use code to program that a certain condition will be fulfilled after a certain amount of ether is transferred.
Another advantage of smart contracts is that they cannot be deleted or changed. Once they enter the blockchain, the information in them cannot be faked. This allows us to talk about the prospects of using such programs in almost any area in the future.
An example is the use of such contracts in bookmaking. For example, a similar code is created for bets on a specific match. Users transfer money to the specified address. According to the results of the match, the winnings will be automatically sent to the winners. And there are many similar examples.
The advent of the Ethereum network allowed the creation of so-called Decentralized Autonomous Organizations or DAOs. They are controlled by a program that is similar to the usual code used in various applications.
The Ethereum-based DAO project was an attempt to create such an organization. The tokens of this system allowed each holder to have a vote. However, the result of the launch was unexpected. Hackers took advantage of vulnerabilities and were able to steal a third of the funds that were on the decentralized organization's smart contract.
The DAO crisis led to the emergence of an Ethereum fork. As a result, two networks were formed - Ethereum and Ethereum Classic. The attack on the decentralized organization exposed the risks associated with the technology. However, the emergence of the DAO is a prime example of how smart contracts have huge potential in the future.
General information about the Ethereum cryptocurrency
New tokens appear as a result of Ethereum mining. This is the most important factor in the security of the entire distributed system. During the mining process, nodes distributed around the world perform computational operations and calculate complex puzzles.
A miner needs to have more efficient equipment to get the task done. Blockchain power is measured in hashrate. And the higher it is, the more complex the "puzzle" is. In order to motivate miners to make calculations, nodes receive transaction fees. In addition, there is a fixed amount in ether, which the owners of the farms also receive for their work.
Unlike bitcoin, ether has no emission ‘ceiling’. This is due to the fact that tokens are required for smart contracts to work. And since the growth of applications on this blockchain is planned in the future, it is necessary to determine how much cryptocurrency will be required to service the entire system. And over time, even more ether may be required. Therefore, restrictions on the maximum emission can only harm.
Gas to Ethereum or Transaction Fees
Each transaction on the network requires a certain fee. Gas just plays the role of internal currency, a kind of "fuel". Miners Miners incorporate transactions into the blockchain and are rewarded for this. They can also decide which transactions will be included in the block based on the level of commission offered by users.
By analogy with the Bitcoin network, as the load on the blockchain grows, the cost of gas will be higher. Accordingly, when the load goes down, so does the price of gas. There is a minimum fee per transaction. At the same time, the implementation of complex smart contracts will require much more gas.
Like bitcoin, ether is divided into fractional parts. The minimum is gwei. This helps to conduct transactions even for small amounts.
Along with the minimum amount of gas that is set for transactions, there are special restrictions. They are needed to protect users from the risk of spending more on commissions than expected. If an error occurs during the implementation of a smart contract, this can lead to higher gas consumption. To protect against such situations, there are limits that users can set themselves.
Investments in Ethereum, advantages and disadvantages, prospects
Ethereum can be viewed as a state-of-the-art technology with great potential for the future. However, some users have paid attention to the value of the cryptocurrency and its growth over the past few years. Therefore, ETH can be considered not only as a cryptocurrency of a promising project, but also as an opportunity to invest part of the funds with the prospect of making a profit in the future or preservation of their savings within the blockchain.
Why Consider ETH as an Investment Opportunity
First of all, the Ethereum blockchain is a network with enormous potential. You can run your own projects and create applications on it. In the future, smart contracts can be used not only in business, but even in politics or, for example, in art (NFT is a prime example of the latter).
The Ethereum blockchain has long gone beyond a network created solely to conduct transactions. It wasn't conceived exclusively for that purpose, either. The creators of the project had a completely different task - to help digitalize the economy and make smart contracts an indispensable assistant in almost any sphere.
Ether, like Bitcoin, has already been time-tested. Since its launch, the network has gained a huge number of users. The boom came in 2017, when many ICOs were created on this platform. And despite the fact that about 90% of initial offers turned out to be fraudulent, some of them still work.
Here we can give an example of the dot-com boom and its subsequent collapse. Then literally everyone was interested in websites. They were created simply because they were fashionable and well-known (many ICOs were held in about the same way). Then, when awareness came, the bubble burst. But this did not lead to the disappearance of websites or the Internet. On the contrary, many well-known companies, including Google, emerged on the wave of interest in dotcoms.
Roughly the same thing happened after 2017. Despite the fact that the blockchain market has gone through rather difficult times, and many have lost investments in various fraudulent ICOs, he industry as a whole has shown that the blockchain has a future It can be said that NFT is precisely a prime example of how the collapse of an ICO has brought disappointment as well as hope.
If we consider investments in ether from the point of view of the value of the cryptocurrency, as in the case of Bitcoin, historically there is an upward trend on the chart. Yes, there were drawdowns, and quite large ones. However, the price has crossed the $ 3,000 mark and is looking to take the next $ 4,000 mark in the future.
If we look at investments in ether in terms of cryptocurrency value, as in the case of bitcoin, historically there is an upward trend on the chart. Yes, there have been drawdowns, and quite large ones. However, the price has passed the $3,000 mark and is looking to take the next milestone of $4,000 on the horizon.
It will be easier to understand whether it is worth investing in cryptocurrency by identifying the main advantages of this project:
- Ethereum, along with Bitcoin, is considered one of the most secure blockchains. Here you can safely store and work with information. Counterparties can be sure that once a smart contract is added to the distributed ledger, it cannot be changed.
- Ethereum is time-tested. The project appeared in 2014. Since then, the level of trust in Ethereum has grown significantly. The community has millions of users worldwide.
- The possibility of using a simple programming language solidity. This allows programmers to write smart contracts quickly enough and virtually eliminates errors in the code.
- Thanks to Ethereum, any project can crowdfund and create temporary tokens. Even if this is some kind of new blockchain, its team can use Ethereum as a temporary platform to communicate with investors. After launching its own blockchain, the project will be able to swap between ERC standard tokens and its own coins.
- High speed of transactions. In general, when the Ethereum blockchain is not under heavy load, all transactions are carried out in a matter of minutes. However, during periods of high load, the time can increase.
- Low fees. Under standard conditions, user transaction costs are really low. However, there are known cases when hundreds or even thousands of dollars were paid for transactions.
One of the most serious is the risk of a cryptocurrency's value decline. Like Bitcoin, Ethereum has gone through periods of skyrocketing and severe downturns that can exceed 20% of its value. Accordingly, if a depositor sells tokens at the wrong time, he may lose money.
The second risk is related to technology. Despite the fact that Ethereum is considered the most promising blockchain, it is not yet used in the real sector of the economy. The point is that the implementation of such technologies requires not only software solutions, but also certain steps on the part of states.
Blockchain is more than just a cryptocurrency. And in modern realities, many governments have not even decided on what status Bitcoin and ETH have. There is no talk about the implementation of blockchain technology yet.
Moreover, the use of such technologies in the future may lead to the reduction of a whole layer of civil servants and business employees. After all, a distributed ledger works without intermediaries. Accordingly, some officials will be left behind. All this requires comprehensive measures aimed at not only adapting technologies, but also not harming the economy.
As a result, implementation of Ethereum has been postponed indefinitely. Therefore, the technological advantage of this blockchain is leveled at this stage of human development.
There are several ways to buy tokens of this blockchain:
- P2p transactions;
- exchange offices.
- cryptocurrency trading platforms;
- Broex platform.
Let's consider each option in more detail.
This is one of the simplest ways to buy cryptocurrency without intermediaries. The essence of such a transaction is that the user directly sends a certain amount of fiat money to the counterparty. The latter transfers the required amount of ETH to the buyer.
As noted above, the lack of an intermediary is a huge advantage. That is, the user will not have to pay a fee for the transaction (there will still be costs, since there is a fee within the blockchain. Besides, when transferring funds in fiat currency, the payment service will also take a certain fee).
There are no other advantages of this method. As for the disadvantages, the most serious one is that the buyer must fully rely on the seller's good faith in such a transaction. The transaction is carried out in two stages. First, the buyer sends the fiat currency to the seller and only then, after the latter has received the money, he sends the ethereum.
Therefore, it is better to conclude such deals only with those with whom the user is familiar. Otherwise, you can lose money.
Another drawback is liquidity and asset value. Usually, the price in such transactions is rarely close to what you can get on trading floors or exchanges. In addition, it's not always possible to find a counterparty who has enough ETH to sell.
You can buy cryptocurrency on special websites. Exchangers have certain reserves of ETH or other tokens. All transactions are carried out between the user and such sites (that is, it is no longer a p2p format).
To buy ether, the user finds an exchanger, registers there (or fills in the required data in the process of transaction preparation), determines the volumes he wants to buy, and sends fiat money to the exchanger's payment system.
The advantage of this approach is that, unlike p2p, the user is protected from counterparty fraud. Another advantage is the large volumes that can be purchased on such websites. Usually, the reserves are several tens or even hundreds of ETH, although this information needs to be verified on a case-by-case basis.
It is possible to choose an exchanger with automatic transactions. In this case, the transaction will go through quickly (taking into account the workload of the Ethereum network). When working with exchange sites in manual mode, each transaction is moderated by the administration and here the speed will be noticeably lower.
The disadvantages include the fact that not all exchangers are reliable. Some of them deceive customers. Therefore, you will have to look for a site with a good reputation and reviews. The second disadvantage is that not all of these sites can find the required amount of ether to buy. Finally, exchange rates can differ disadvantageously from those offered by professional trading platforms.
Cryptocurrency trading platforms
It is also possible to buy Etherium on special professional trading platforms. They offer all the tools that can be used to make a purchase at a more favorable rate. For example, such platforms provide indicators and different graphic patterns for technical market analysis.
At such platforms, the possibility to buy at the market price or to expose the pending orders is implemented. The essence of the latter is that the user can buy an asset at an even more favorable price. Here is an example.
Let's say ETH is trading at $3,850. The buyer believes that the asset price will decline to $3,800 before further growth. He places a pending buy order at that level. If the price does decline to that level, he opens a long order.
The advantage of buying ETH through platforms like this is that there is very high liquidity. Hundreds and even thousands of ETH can be purchased on these platforms. In addition, the prices here are the most optimal, since all bids are placed in a special order book..
Some sites provide a training program, which allows you to get acquainted with the world of blockchain, as well as learn all about trading. Thanks to this, beginners will be able to quickly get used to it and open profitable trades.
The downsides include the difficulty of working with such platforms. They offer a heavily loaded interface. Such platforms are suitable for professional traders. If a user just wants to buy ETH, it will be quite difficult for him to navigate on such a website.
Another disadvantage is that the commissions here are usually quite high. With more active trading, the user can significantly reduce the costs through various loyalty programs or internal tokens. But this option will not work if the purchase of ETH is carried out on a one-time basis.
Broex platform and wallet
You can buy the cryptocurrency of Ethereum on Broex. To do this, there are all the necessary tools, and users are offered the simplest interface. The platform has all the necessary functionality to carry out transactions. All transactions are executed promptly.
To do this, you need to go through a fairly simple registration procedure by providing personal data. Also, before the user gets access to the basic functionality, he must confirm his identity through verification. This procedure is automated on the platform and takes only a few minutes.
Upon completion, the ETH buyer can transfer funds to the platform and start making transactions.
Credit and debit cards of various banks, as well as electronic payment systems are available on the platform. It is possible to deposit funds using some cryptocurrencies.
Strategic partnership with Binance
Not so long ago, the cryptocurrency platform entered into a partnership agreement with the Binance cryptocurrency exchange, according to which a large number of currency pairs and exchange directions appeared on Broex. Previously, the platform offered only the most popular tokens, such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Monero, and several others. Now it is possible to work with more than 600 instruments, which allows creating a diversified portfolio.
In addition, users can send requests to the platform team to add a particular coin available on the Binance website.
Reliability and safety
Broex platform is registered in the European Union. It is licensed to conduct financial transactions. Security is a key factor not only when dealing with fiat currencies, but also in transactions with tokens.
The platform's website uses modern security protocols that protect users' personal information from hacker attacks. Moreover, clients' funds are on separate loops and the Broex administration does not have access to this money.
As for cryptocurrency, cold wallets are offered here. They are disconnected from the Internet, which greatly reduces the risk of theft. Users can use the wallet to store any tokens, including their main savings.
The advantages of the platform include:
- Legality. The platform is registered in Estonia and is an EU resident.
- A wide range of methods of replenishment and withdrawal, including using a card of any bank, as well as e-wallets.
- Large selection of trading instruments. Clients can select new coins and submit a request to add them to the platform.
- High speed of processing requests.
- Offers of ready-made portfolios with automatic replenishment and distribution of funds between the most popular coins.
- Instant crediting of funds when replenishing wallets and accounts.
- Low commission fees for all internal transactions, which makes the purchase more profitable compared to many professional platforms.
- Low entry threshold. You can start trading on Broex with only 1,500 rubles on your account. For security, there are limits on replenishment and deposit in the amount of 5,000 euros.
Ethereum is one of the most promising blockchain projects of our time. In addition to cryptocurrency, here you can work with smart contracts, create applications and even decentralized organizations. A token based on this platform is very popular among traders and those who invest in cryptocurrencies.