What is Ethereum (ETH)?
Ethereum (ETH) is a software program based on blockchain technology. It’s commonly seen as the primary competitor to Bitcoin, but the two have significant differences. Ethereum is flexible and lets developers innovate any digital technology form they want.
It was founded by Vitalik Buterin in 2014 and written in a white paper highlighting smart contract usage. This blockchain platform was brought online in July 2015 after a crowdfunding project. Its Ether (ETH) coin is quite popular and is usable in real life, traded, or as an investment.
This platform is decentralized and is not regulated by any intermediary such as a bank or government. Instead, it relies on a public ledger distributed to its holders. Like Bitcoin, Ethereum uses cryptography for transaction verifications and network security.
The platform is also famous for smart contract support. These are digital contracts that applications like decentralized finance (DeFi) use. Other apps running on the Ethereum blockchain include decentralized exchanges (DEXs) and decentralized applications (DApps).
Who Created Ethereum (ETH)?
As mentioned above, Ethereum (ETH) came into the limelight in 2015, but its concept was released in 2014. The founder, Vitalik Buterin, highlighted that this platform would curb Bitcoin’s shortcomings.
Joe Lubin, the founder of ConsenSys, a blockchain software company, co-founded this launch. These two founders were among the first to realize that the platform they’d created was more than just a secure way of transacting.
Other developers who contributed to its inception include Anthony Di Iorio, Jeffrey Wilcke, Gavin Wood, Amir Chetrit, Charles Hoskinson, and Mihai Alisie. And together, they held a crowdfunding process and managed to raise $18,439,086.
The co-founding group launched the Ethereum Foundation in Switzerland. However, some founders left after Vitalik announced it would run as a non-profit. In 2016, a democratic group, The DAO, was formed to advocate for changes to the network. But things didn’t go as planned after a hacker got away with $40 million.
The group decided to hard fork the network to render the hack fruitless. And this led to Ethereum Classic, the original version, and Ethereum, the platform’s new version.
How Does Ethereum (ETH) Work?
Like Bitcoin, Ethereum (ETH) is a decentralized blockchain that is not dependent on a single server. Instead, it’s distributed among many nodes/computer servers globally. So, the network will not be disrupted even if one goes down.
The data interaction/transactions through the network are stored in blocks on the blockchain. The miners, however, must validate these blocks before the addition. This mining process is called the Proof of Work (PoW) consensus method. And they are rewarded with Ether (ETH) for each successful transaction.
Once the block is complete, it’s added to the public ledger where everyone can see it. According to Gary DeWaal, “new blocks on the Ethereum network get validated after every 12 seconds”.
This means that Ethereum technology is more efficient than Bitcoin’s. There is no cap on the number of Ether available since the demand will always be high. Moreover, Ether is not termed as a value token but rather a utility one.
Is Ethereum (ETH) a Good Investment?
The decision to invest in Ethereum (ETH) is up to you. According to DeWaal, you can consider investing in this digital investment because:
- As more apps use the Ethereum network blockchain, its value may increase.
- It is migrating to a newer and faster protocol.
- It is valuable and has a digital currency (ETH).
You can also consider investing in companies using this blockchain to build applications. However, given the market volatility, note that you could make significant profits or losses.
Therefore, ensure that you consult a certified financial advisor to discuss this investment’s risks and future predictions. Moreover, the best approach is to invest wisely and put in what you can afford to lose.
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