Ethereum Ξ | Explanation, How to Buy, How it Works and the Wallet?



Ethereum is an open source distributed system that offers the creation, management and execution of programs or contracts (smart contracts) on its own blockchain. It is thus an alternative to the classic client-server architecture.

This computing platform that uses ETH (also called Ether) to pay transaction fees (or “gas”). Developers can use it to run decentralized applications (Apps) and issue new crypto assets, called Ethereum tokens.

It uses the internal unit of Ether (abbreviated as ETH, symbol: Ξ) as a means of payment for processing transactions on the blockchain that are processed by participating computers.

Difference between Bitcoin and Ethereum

It is different from Bitcoin, which is only focused on peer-to-peer payment. Tens of thousands of developers are building apps on Ethereum for the finance, entertainment, cloud, and real estate industries.

The Ethereum blockchain developer community is one of the largest and most active in the world.

How to buy Ethereum?

Before buying it or ether, it is important to keep in mind that, as with any risky asset, you should not invest more than you can afford to lose.

To obtain ethers, you must open an account on a cryptocurrency exchange platform. In general, it is possible to buy them by card or by bank transfer.

How does Ethereum work?

The operation of this platform is inspired by that of Bitcoin (storage of the history of network transactions) but it is more complex since it makes it possible to build more complex applications.

It makes it possible in particular to create smart contracts, contracts that run automatically on the network following predefined conditions.

Let’s illustrate this with a concrete case: if a plane is at least 1 hour late, the airline will automatically reimburse 20% of the plane ticket thanks to a smart contract.

Like the Bitcoin blockchain, Ethereum has its own cryptocurrency, Ether, also referred to as Ethereum within the community. It is not issued by a bank or another organization but by the protocol itself.

Ether, like other cryptocurrencies, is brought into circulation through mining.

“Miners” perform mathematical calculations with their hardware for the network to confirm and secure transactions. It should also be noted that Ethereum, like any public blockchain, works with a consensus algorithm to ensure that all network players agree on a single version of the blockchain data at all times.

Ethereum wallets

It is possible to keep your ethers at the exchange where you made the purchase or in a wallet, a physical or digital electronic wallet. It avoids the risks of hacking that cryptocurrency platforms can fall victim to and allows you to control your funds.

Wallets are composed of a public key, known to all, which corresponds to an Ethereum address, and a private key, known only to the holder of the wallet. Physical wallets look like USB keys.

Two players are competing for the market, the French Ledger and the Czech Trezor. Digital wallets, i.e. software wallets, are accessible on computer and mobile. Some examples: ArcBit, BitGo, Electrum, Mycelium…

What is Ethereum 2.0?

Ethereum 2.0, dubbed Serenity, is the big major protocol update of Ethereum that started on December 1, 2020. It is broken down into three phases: beacon chain, shard chains and eWASM. It is eagerly awaited by the community.

Phase 0: Beacon Chain

Phase 0, which began on December 1, 2020, is the transition between proof of work, a method of validating blocks of transactions that involves using the computing power of a machine; and proof of stake (proof of stake), method of validating blocks of transactions which consists in proving the ownership of a certain amount of crypto-currencies.

It will operate in parallel with the proof of work blockchain to avoid breaks in the continuity of the chains.

Stage 1: Shard chains

Phase 1 concerns the deployment of shard chains which will make the Ethereum network more scalable. Today, Ethereum is limited to 7-15 transactions per second. Sharding consists of dividing data to speed up its processing. For example, a sharding system on Ethereum might put all addresses starting with 0x00 in one shard, all addresses starting with 0x01 in another…

Phase 2: EWASM

The EWASM (Ethereum Web Assembly) is an execution engine designed to replace this current virtual machine, which executes smart contracts on the Ethereum network. It is based on Web Assembly, an open source World Wide Web standard for application development.

This new machine will improve the performance of Ethereum but also support more languages ​​for the development of smart contracts (C, CC++, Javascript, Rust, etc.), currently limited to Solidity.

Cryptocurrency | What is It? and Why such a success for crypto currencies?

Important information: All investments involve some degree of risk. As a general rule, you should only sell and buy or trade financial products that you are familiar with and understand the risks associated with. You should carefully consider your investment experience, financial situation, investment objectives, level of risk tolerance and consult your independent financial advisor regarding the appropriateness of your situation before making any investment.

Sources: PinterPandai, Consensys, Time, WhatIs

Photo credit: Vjkombajn / Pixabay

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