Introduction To Blockchain: What Ethereum Is?

When looking into virtual currencies, you will often hear about a currency called “Ethereum”. It is the second most famous currency after Bitcoin.

One of the significant currencies featured on global exchanges is Ethereum.

In this article, if you read this article, you will be able to explain what Ethereum is, such as an overview of Ethereum, its features, and how it works, so don’t forget to read it to the end!

Ethereum is a platform with decentralized applications and smart contract functionality.

It is easy to understand if you can build an application using Ethereum.

The project has been in open-source development since December 2013, and the first stable version (Homestead) was released on March 14, 2016.

The cryptocurrency used within this platform is called Ether (ETH).

From here, we will explain the features and processes of Ethereum.

The most prominent feature of Ethereum is smart contracts.

Ethereum is built on smart contracts and can automate transactions. Specifically, it contains a program that automatically performs a predetermined action when the user takes a specific effort.

With this smart contract, you can guarantee contract transparency without third-party intermediaries.

Ethereum was created as a platform for developing decentralized applications called DApps.

Ether serves as a “utility token” that pays for DApps.

A hot topic in recent years has been the adoption of Ethereum as the main transaction currency for “NFTs”.

When you buy and sell digital artwork as NFTs on the Ethereum platform, all transactions take place on the blockchain and can be transacted securely.

The following article explains NFT in detail, so please take a look.

Here are some of the benefits of using Ethereum.

In order to complete a virtual currency transfer, the transaction must be approved.

Approvals occur once every 10 minutes for Bitcoin, while once every 15 seconds for Ethereum, making it possible to send almost instantly.

Ethereum does not have a problem limit.

Bitcoin has a “half-life” where the supply decreases as the number of coins issued increases, whereas Ethereum has no such limit and is relatively stable.

Blockchain technology, which is used in cryptocurrencies like Ethereum, is known for its strong security and anti-fraud of information.

Ethereum, which combines blockchain technology with smart contract technology, can be said to be a system with strong security.

From here, we will introduce the future challenges of Ethereum.

Scalability issues refer to bottlenecks caused by blockchain’s limited processing power.

Although Ethereum has a fast processing speed, it has a problem in that the processing cannot keep up with the transaction demand and cannot respond.

In other words, the more popular Ethereum becomes, the bigger the scalability problem becomes.

In Ethereum, although security is strengthened through smart contracts, program and data errors are difficult to deal with.

In the past, when 3.6 million ETH was stolen, there was a case where the only way to deal with it was to make the data disappear.

A “gas fee” in virtual currency is a fee that occurs during transactions.

Ethereum charges a fee in addition to a remittance fee for executing smart contracts, so gas prices will increase proportionally as transaction volume increases.

As we said, Ether is the cryptocurrency of the Ethereum platform. It is something like ‘Petrol’ that replaces Ethereum. This is why ether is known as ‘gas’. Every transaction, every movement that takes place within the Ethereum network, requires gas. And when more important, a bigger, more gas you will need. Logical, right? Gas, in short, is the unit of measurement used in transactions with ETH.

We are going to do an example. I request you to do something. That task costs 3 Ether. Well, that “job” will be linked to a smart contract where it will say that, if X person does that job for Y, they will be sent 3 Ether. It is sealed and immutable on the blockchain of the Ethereum network.

So, this task will be done automatically, efficiently, and almost instantly.

Obviously, Bitcoin and Ethereum are two popular cryptocurrencies. Yes, in that order. And they have a lot in common, like not reporting to any government or regulatory agency. But there are many differences between them too.

The Ethereum blockchain is like Bitcoin, this is true because it also serves as a kind of historical record of transactions. But, with the Ethereum network, so-called ‘apps’ or decentralized applications can also be developed.

But, let’s go over the main differences between Bitcoin and Ethereum:

Now that you have a general overview of Ethereum, we will show you how to purchase it.

Select a virtual currency exchange and open an account

Choose an exchange that suits you from domestic and foreign virtual currency exchanges and open an account.

To open an account, you’ll need documents such as identity verification, so it’s a good idea to prepare them in advance

Also, opening an account can take some time, so it’s a good idea to have plenty of time to complete the process if you want to invest in virtual currency.

Also, fees and transaction units differ depending on the exchange, so it will be easier to manage if you compare and choose correctly.

Deposit your currency to trade in the virtual currency exchange account opened at ①.

The deposit procedure is done from the exchange’s browser or application.

After making the payment, don’t forget to check the payment amount.

Purchase Ethereum at a sales office or exchange

Once you deposit your coins, you can finally buy Ethereum in your desired unit.

When buying and selling virtual currencies, there are cases where a significant fee called the spread is incurred, even in fees declared by virtual currency exchanges.

The spread is the difference between the selling price and the buying price of the virtual currency. And the bigger the difference between the selling price and the buying price, i.e. the bigger the spread, the higher the fee.

Originally published at https://blockchain101.famecoin.ai.