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Ethereum: Everything that you wanted to know

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After Bitcoin, Ethereum is currently the second most popular cryptocurrency. Since its inception in 2015, there have been many prophesies about its bright future. Ethereum is much more than just an instrument of exchange, mainly due to the different technology used compared to its virtual currency rival, Bitcoin. What is Ethereum? Can Ethereum, one day, dethrone Bitcoin from the cryptocurrency throne? And how can you buy Ethereum? In our article, you will learn everything you want to know about Ethereum!

i Ethereum solves the problem of scalability - January 28, 2018 The Ethereum platform is becoming increasingly popular due to its enhanced features, but this also brings some levels of inconvenience. Increasing network utilisation results in slower transaction times and unusually high processing fees. As a result of the various pressures, the developers acted quickly and it was not long before the founder of Ethereum, Vitalik Buterin, introduced a ready-made technology that divided blockchain data into smaller, more manageable parts. It is currently the first of a series of four steps leading to a more efficient platform and better scalability, with the next phase being completed in about two months. Find more info in the section Ethereum News - what happened in the world of popular cryptocurrencies.

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  1. What is Ethereum?
  2. Ethereum provides the ideal environment for smart contracts
  3. Ether serves as the fuel of the Ethereum network
  4. Ethereum news - what happened in the world of popular cryptocurrencies?
  5. Differences between Bitcoin and Ethereum
  6. Ethereum Hard Fork
  7. How to buy Ethereum?
  8. How to choose the best Ethereum wallet?
  9. How to mine Ethereum?
  10. ETH and CZK - what is the exchange rate and the price of Ethereum?
  11. Can Ethereum catch up with bitcoin?

What is Ethereum?

Ethereum, like Bitcoin, is encrypted based on a decentralised database that keeps and protects an ever-increasing number of records. In computer science, this special kind of database is called a blockchain. It is also a decentralised virtual machine for running smart contracts.

i "Blockchain is the same for Bitcoin as the Internet is for Email - a great electronic system on which you can build your applications. Currency is just one of these applications. " Sally Davies.

Ethereum was created by the Russian-Canadian programmer and cryptocurrency inventor Vitalik Buterin, who also contributed to the development of Bitcoin. Rather than creating new cryptocurrencies, developers could create a shared computing platform that allows the blockchain to operate with decentralised applications.

The whole development was financed by crowdfunding and they raised slightly less than 18 million euros. The Ethereum network was subsequently launched on July 30, 2015, roughly two years after the whole concept was conceived. Ethereum falls into the category of next-generation cryptocurrencies, often referred to as Bitcoin 2.0.

Ethereum provides the ideal environment for smart contracts

The primary purpose of creating Ethereum was to improve smart contracts and extend them into wider use where they could, for example, replace and, in a way, decentralise all conventional contracts and agreements. Their use is absolutely vital for the operation of the entire network, and this is what makes Ethereum significantly different from Bitcoin.

i A smart contract is any protocol or software that provides, verifies or enforces the negotiation or execution of a contract. Whilst a standard contract describes the terms of a relationship (usually enforceable by law), smart contracts promote these terms using the cryptographic code.

Bitcoin was the first technology to support basic smart contracts in the sense that the network can transfer something valuable from one person to another. The entire node network will only confirm and approve the transaction if all of the specified conditions are met. However, Bitcoin is limited to a currency-only case. Ethereum, on the other hand, has replaced the very limited scripting language that Bitcoin (containing only about 100 scripts) uses, and allows developers to write their own programs and, therefore, smart contracts.

ethereum; chytré kontrakty

Smart contracts are actually programs that do exactly what their creators set. Contracts will help you to exchange money, assets, shares or, in short, anything with value, in a transparent and non-conflicting process, avoiding any third party interventions (lawyer, notary). A very popular example for understanding smart contracts is their comparison to a digital sales machine. Computer scientist and cryptographer Nick Szabo described how users can put data or something valuable into a slot machine and get the final item (eg. a drink or house) from the same machine.

What do smart contracts do?

  • Work as "multiple signatures" - funds are released if the required percentage of people agree.
  • Manage contracts between users - any purchases, lease payments, insurance, etc.
  • Provide tools for other agreements/contracts - smart contracts can communicate with others and provide them with additional information.
  • Store application information, such as domain registration information or membership records and registration information (passwords, usernames, credit card numbers, etc).

Ether serves as the fuel of the Ethereum network

Each action in the Ethereum network is supported by a certain amount of "fuel", which is based on the required computational power and the duration of the action. Instead of serving as a virtual currency, it is used as a digital fuel for the entire network.

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Miners, at the instigation of the administrator of the smart contract, will trigger a program (the change, deletion, modification), and are rewarded with Ether cash. The normal transaction, for example, is 500 units, this quantity is subsequently converted to Ethers and the resulting amount works as a transaction fee, as is the case with Bitcoin.

Ethereum news - what is happening in the world of cryptocurrencies?

Cryptocurrencies have in recent times, attracted excessive, almost enormous levels of attention. However, the rapid development of virtual payouts brings with it a constant and often confusing motion of change. Ethereum, as probably the most attractive cryptocurrency of today, is no exception - the whole network is constantly evolving, changing, and almost always growing every day. In order to get yourself up to date and in the picture, we have prepared the most important news and updates on Ethereum.

Ethereum News and Updates

The world is infatuated with CryptoKitties - 07.12.2017

CryptoKitties is one of the first blockchain games ever. Players can buy a virtual kitty (CryptoKitty) for Ethers (ETH), each kitten being absolutely unique in its appearance or features. These kittens can also be bred by their owners to create new unique companions that they can subsequently sell. The game has gained an incredible level of popularity across the Internet - according to statistics from ETH Gas Station, payments associated with CryptoKitties currently account for the largest portion of transactions across the Ethereum network.

Bitcoin Cash outpaced Ethereum for a short time - 12.11.2017

Ethereum has for a long time been the leading cryptocurrency pursuing Bitcoin, but on November 12, after the value of one Bitcoin Cash exceeded $1500USD, everything has changed. Bitcoin Cash passed the market capitalisation of Ethereum thanks to the rapid growth of the exchange rate and in the process became the world's second most valuable cryptocurrency. Despite the fact that the situation did not last long, it was a significant moment for Bitcoin Cash, as Bitcoin Cash ranked second behind its "Big Brother" bitcoin. The event, together with many congratulations, was shared by Vitalik Buterin, the founder of Ethereum on his twitter account.

i Ripple Digital Currency and its associated payment system are popular due to their extremely fast and cheap transactions. Experts around the world are also encouraging this digital world to a great future. At the same time, however, Ripple is a source of unprecedented controversy, and due to insufficient decentralisation it also brings its risks. Learn more in our Ripple (XRP) article.

The differences between Bitcoin and Ethereum

As previously stated, Bitcoin and Ethereum are networks based on a public and decentralised blockchain database. Although there are significant technical differences between these networks, the most important thing is that Bitcoin and Ethereum totally differ in their purpose and capabilities. While the Bitcoin blockchain is used to track Bitcoin virtual currency transactions, the Ethereum blockchain focuses on triggering the source code of any decentralised application (smart contracts).

ethereum vs. bitcoin

Another difference is that the average time to extract one block - in the Bitcoin database it is about 10 minutes, whereas for Ethereum it is only 12 seconds. For this reason, the confirmation of transactions is faster and Ethereum does not have to deal with the same scaling problems that Bitcoin has been suffering from for a long time. In addition, two-thirds of all Bitcoins have already been recovered and most of them are the primary miners; on the other hand, Ethereum has decided to offer the first Ethers in a pre-sale and probably half of all Ethers will be extracted by 2020.

Ethereum Hard Fork - Not only Bitcoin has been split into two branches

Practically since its birth, Ethereum has attracted great attention. The breakthrough occurred in 2016 when DAO ( Distributed Autonomous Organization) was established. DAO's goal was to provide a decentralised business model to commercial and non-profit companies with clever contracts on the Ethereum network. Nearly 150 million USD was raised for the ambitious project in less than a month. The problem arose a month later, when a hacker attack on an organisation resulted in an anonymous group stealing $50 million in Ethereum cash.

i Bitcoin Cash
The hard fork took place on August 1 on the Bitcoin Network. How it all played out, you'll learn in our article: Bitcoin vs. Bitcoin Cash.

This event caused considerable upheaval throughout the community, and eventually led to its division. One part of it encouraged the return of money back to investors, but it would require major changes and divide the entire Ethereum network, while the other part of the community supported the continuation of the current network without major changes. In the end, a more radical variant of the network, or "hard fork", won, and the whole blockchain database was split into two distinct branches - Ethereum (which is an article) and Ethereum Classic.

The division was somewhat hectic, and to this day is criticised for its conduct. The decisive vote on changes in the Ethereum blockchain was attended by 860 users of the currency, while the entire "hard fork" was repeatedly under attack by hackers. Nevertheless, Ethereum surpassed the crisis and after one year it ranks among the most popular cryptocurrencies.

How to buy Ethereum?

You can buy Ethereum in three different ways:

  1. At an Ethereum stock exchange or exchange office - Bitfinex , Kraken , Coinbase.
  2. In ETH automats - Parallelni Polis has an ether atm, where you can buy Ethers for Czech crowns.
  3. Acquire in person - via facebook groups or Internet discussion forums.

On the Internet exchanges and exchange automats, you can exchange Ethereum for most of the world currencies (EUR, USD, GBP), as well as for Bitcoins and other cryptocurrencies. A condition for purchasing them is an active Ethereum wallet and that your identity has been verified, using a copy of your identity card and a document with your address (such as a bank account statement). You can find an overview of the best exchange bureaus at hongikat.

How to choose the best Ethereum wallet?

For an end user who only owns Ethereum currency, it is important to have a secure place to store your money. Similar to Bitcoin, the easiest solution is to establish an Ethereum wallet. There are several types of electronic wallets - you can choose from classic desktop wallets for your computer, mobile wallets in the form of smartphone applications, or purely online wallets that are only available through the browser on your device. An overview of the best Ethereum wallets can be found on the coinstair website.

ethereum wallet, exodus

Historically, however, it has happened several times that wallets have been stolen or disrupted by hackers, which all cryptocurrencies are vulernable to. So far, the safest way to store Ethereum is in a hardware wallet. They work in a similar way to software wallets, but all of the private keys are retained in a secure hardware device and are therefore immune to computer viruses and hacker attacks. Also, confirmation of transactions takes place outside the PC with multiple authentication methods.

How to Buy Ethereum on a Coinbase Exchange - INSTRUCTIONS

The simplest and safest way to buy Ethereum is through the Bitcoin exchange system that supports Ethereum.

Here's how to buy Ethereum through a specific Coinbase Stock Exchange in a few steps:

  1. Sign up to create an account on Coinbase.
  2. Add your preferred form of payment (credit card, debit card, bank account).
  3. After verifying your payment method, start buying Ethereum in the "Buy/Sell" category.
  4. Select the amount you want in each box.
  5. Confirm your purchase by clicking on "Buy Ethereum".

Jak koupit ethereum?; coinbase

Now your Ethers are safely stored and linked to your CoinBase account. You can also download the Coinbase electronic wallet, where you will still have your Ethers, on Android or iOS.

How to extract Ethereum?

With a little bit of help and proper mining equipment, extraction of Ethereum still has high potential and, unlike Bitcoin extraction, can be profitable in the case of solo-mining. Bitcoin mining is extremely difficult because, to mine these days, you now need to use powerful ASIC chips, which are very costly. Ethereum, on the other hand, is best leveraged by GPUs (graphics cards) that you can effectively combine into a mining rig, creating a kit specially designed to extract cryptocurrency. Consequently, the extraction efficiency can also be increased by joining a mining pool that focuses on Ethereum, for example, on the cryptocompare site.

i How to configure your PC for mining
To maximise the profit from cryptocurrency extraction, you need to find the ideal balance between power and the power consumption of each individual computer component. The most important element of classic mining is a powerful graphics card, while the motherboard must hold as many of these graphics cards as possible. Above-average power is required, but the processor is primarily energy-saving.

If you still wonder if extraction can be advantageous for you, this special calculator will help you calculate the net mining gain based on your computing power and the price of electricity. A great way to start crypocurrency mining will be revealed in our simple but detailed guide - How to Extract Cryptocurrencies with Simplemining.net.

Can Ethereum catch Bitcoin?

The advanced functionality of the Ethereum network in the form of smart contracts makes the currency commercially attractive and attracts large banks, firms, and even governments. For example, more than a year ago, the Ukrainian Parliament has shown interest in implementing smart contracts into its voting systems.

i Are you interested in virtual currencies and want to dive into Bitcoin? Our educative article will help you to find out what you want to know about Bitcoin.

Today, the technology has become so popular that there has been an association of commercial institutions interested in Ethereum and the establishment of the Enterprise Ethereum Alliance (EEA), which in May 2017 had 86 members (including companies such as Microsoft). If this trend continues, Bitcoin will quickly have an equal competitor. What do you think? Does Ethereum have a chance?

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