From 2008 until now, the rise of cryptocurrencies has drastically changed the financial industry. Being able to hold and invest money through a digital app has led to more currencies entering the market and the widespread of businesses that have started accepting cryptocurrency payments to keep up with the trends.
But as trends followed, new technologies changed the crypto market, like the Ethereum marketplace. It offers more than a place for transactions, being a digital store for the ETH currency and valuable for investments. Anyone can create new assets and trade them on Ethereum from their digital wallet; therefore, it’s now the second cryptocurrency market worldwide among users. In the following paragraphs, we’ll dive into the world of Ethereum and how it evolved up to this point.
Short history
It all started in 2013 when Vitalik Buterin first described the concept on a paper with the image of a platform beyond financial uses. After proposing the development of this new platform with a general scripting language, it got pre-launched to the public. In 2014, the sales raised more than $14 million, while the Ethereum protocol introduced the creation of 5 ETH for every block mined. One year later, Frontier, the initial version of the platform, was launched, and three years later, Ethereum’s volume reached $450 million. Nowadays, it’s the second most popular cryptocurrency globally, with a large market capitalization.
Defining Ethereum
Ethereum is an open-source platform using blockchain technology. It is used for cryptocurrency trading, and with the help of smart contracts, sending transactions or loaning funds are automatically carried out, facilitating the process. Its currency is called Ether and works through a decentralized computing protocol without any third-party interference. Having an unbounded supply, there are no limits to how much Ether can enter circulation, unlike other cryptocurrencies. Mining Ethereum involves an investor (miner) that provides energy, computer space, and time to process the sorting through blocks.
The smart contract functionality of Ethereum was a new opportunity for the decentralized finance industry (DeFi) and decentralized apps (Dapps). Why are these relevant for the cryptocurrency market? Because these systems offer more control and visibility over your money while giving enough exposure to the global market as alternatives to local currencies. Here is what they do:
- DeFi consists of financial services from public blockchains. Most used on Ethereum, this system plays the role of bank support, as you can do most common transactions with it (borrow, lend, buy insurance) without paperwork or a third party. It’s flexible, fast, and open to anyone, and you don’t need to provide personal information to access transactions.
- Dapps are apps that use Ethereum blockchain for smart contracts that run on decentralized networks. It provides data integrity, resistance to censorship, and zero downtime.
Ways to mine Ethereum
You can mine Ethereum in three distinct ways:
- Pool mining is an easy way to mine, allowing miners to solve Ethereum blocks through collective computing power in less time, and the reward is split based on a power contribution.
- Solo mining is more profitable in the long run but tends to include more hash power, which is your hardware programmed to solve crypto algorithms.
- Cloud mining is usually done by someone you pay to mine. You’re “renting” another miner’s computer power by paying an upfront fee while you receive coins.
After choosing your mining approach, it’s time to get to work. The following steps are:
- Opening a crypto wallet to store your coins
- Getting the proper infrastructure (computer, GPU driver)
- Start to mine with other aspiring miners!
Like any other market, this cryptocurrency is also volatile, with the Ethereum price USD being influenced by high traffic and utilization due to the unlimited supply for crypto users. The NFT (non-fungible tokens) industry also determines the ETH price, where you can hold non-fungible assets, like pictures, books, or any other art form.
The difference between Ethereum and Bitcoin
Bitcoin has been on the market since 2008 and is the first cryptocurrency in the world. Its transactions are recorded in similar peer-to-peer technology, but it works more as a bank.
There are a few differences between the largest cryptocurrencies, even if the blockchain technologies are similar. While Bitcoin is known to be digital money, Ethereum goes further than that with more features:
- While the average block time of Bitcoin is around 10 minutes, you can mine Ethereum in 10 to 15 seconds due to the unbounded supply.
- Both systems are used as digital currencies, but Ether takes over smart contracts too.
- Bitcoin has the pool mining concept regarding the protocols used, while Ether is based on a Ghost protocol that allows a quicker confirmation of blocks.
Ethereum 2.0
After so many upgrades, Ethereum is becoming more efficient and scalable by changing the network from a proof-of-work to a proof-of-stake. Users can now become network contributors without using expensive mining equipment. At the same time, the complexity of the cryptographic work will decrease, generating more gains for the whole network.
Another improvement for Ethereum is introducing sharding, a processive technique that increases the efficiency of its resource usage, therefore providing a faster blockchain. Lastly, a new web assembly language, eWASM, is helping programmers to choose from several languages for writing codes to run on the blockchain, with no need for them to learn an Ethereum-only coding language.
The eWASM is significantly improved from the first EVM (Ethereum Virtual Machine) execution program. It is used to run the network nodes that facilitate the speed of smart contracts, which could be run on the EVM to execute complex financial transactions or operate social networks.
Final thoughts
Ethereum is the second most successful blockchain technology, constantly improving. While inspired by Bitcoin, this cryptocurrency offers more opportunities for users, like buying insurance, borrowing funds with collateral, and accessing stable currencies. There are more ways to mine it, and you can explore the world of Ethers by having your wallet safely and unlimitedly.
