What is Ethereum (ETH)? Quick Guide to All You Need to Know
Ethereum is currently the largest smart contract platform for the development of decentralized applications (dApps) in the cryptocurrency space. Ethereum was launched by Vitalik Buterin in 2015 and its first concept was drafted in late 2013. Since its inception Ethereum has spawned countless dApps and new blockchains based on the ERC-20 protocol and is currently the second largest blockchain project in market capitalisation after Bitcoin.
Ethereum is available on nearly any exchange in operation and can be easily purchased through a number of payment methods. One of the easiest exchanges to buy Ethereum on is Binance as the platform offers direct credit card payments to purchase Ethereum.
Quick Guide – Buy Ethereum (ETH) via Credit Card on Binance
- Create a new account on Binance.com
- Click on “Funds” and then “Deposits”
- Click on “Buy BTC & ETH with credit card” in the upper right corner.
- Choose the amount of ETH you would like to buy and click on “Buy now”
- Then follow the instructions of the payment processor to complete the transaction
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History of Ethereum
Ethereum’s initial whitepaper was published by Vitalik Buterin in December 2013, which laid the foundations of what the Ethereum blockchain and dApp ecosystem is today. The original founders of Ethereum in 2013 were Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, & Amir Chetrit. In 2014 Joseph Lubin, Gavin Wood, & Jeffrey Wilke were added to the group as additional founders. Ethereum is unique in that is has an unusually large group of founders.
Ethereum’s first real release was in May 2015 when the blockchain was first made available publicly. Since then Ethereum has progressed through four major upgrades. The latest was released in February 2019.
- Version 0 “Olympic” released in May 2015
- Version 1 “Frontier” released in July 2015
- Version 2 “Homestead” released in March 2016
- Version 3 “Metropolis (vByzantium)” released in October 2017
- Version 3.5 “Metropolis (vConstantinople)” released in February 2019
- Version 4 “Serenity” currently in development
The DAO incident
The DAO incident was the single most influential event in Ethereum’s history and resulted directly in the split of Ethereum into Ethereum Classic and Ethereum. Through an exploit the DAO organisation lost 50 million USD which were later recovered through a hardfork of the blockchain to reverse the transaction. The decision to roll back the exploitative transactions was criticised by many users and resulted in about 10% of Ethereum’s userbase supporting the old blockchain after the hardfork, creating Ethereum Classic. Ethereum Classic and Ethereum are now two distinctive cryptocurrencies sharing their blockchain history up to the hardfork before diverging.
At the time of writing this article Ethereum is the second largest cryptocurrency by market cap with just around 26 billion USD. Ethereum was priced lowest back on the 21st October of 2015 trading at only 0,42 USD and reached its all-time high on the 13th of January 2018 with 1.432 USD. Currently there are over 100 million Ether in circulation and the blockchain has no hard cap for its supply which has in the past raised concerns about inflation. Since its launch ETH has seen an increase of its supply by about 10% per year. While Vitalik Buterin initially said that the Ethereum supply would not reach 100 million Ethereum for the foreseeable future, it has in fact already done so. Buterin suggested a new hard cap at 120 million Ether in his Ethereum Improvement Proposal (EIP) back in April 2018 but the proposal so far has not been backed by the majority of Ethereum supporters.
Ethereum can be mined in a similar fashion to Bitcoin. The major difference to Bitcoin Mining is that Ethereum Miners cannot use ASICs to mine ETH and have to rely on GPUs. The ASIC ban was implemented to allow normal users to effectively mine and compete with larger mining businesses.
- Block Time: 12 seconds
- Algorithm: Ethash with DAG
- Reward: 2 ETH per block
Proof of Stake and Proof of Work
Ethereum plans to fully switch from Proof-of-Work to Proof-of-Work in the future. The main advantages for PoS being the lower energy consumption, a reduced centralisation due to the independence from mining hardware and better scalability for future growth.
Ethereum being the second largest blockchain on the market boasts the largest number of active dApps. Currently there are over 2500 dApps for Ethereum covering multiple niches with over 22.000 daily active users.
Since when does Ethereum exist?
A: Ethereum was initially released on the 30th July 2015, while the initial concept for Ethereum was devised in late 2013 by Vitalik Buterin.
Is Ethereum anonymous?
Just like Bitcoin Ethereum is not completely anonymous. All transactions of the Ethereum blockchain are recorded in a public ledger which makes it possible to track transactions if your identity can be linked to a transaction or Ethereum wallet address. Using an exchange which requires identification of its users for KYC and AML regulations will make it possible to track any transactions and holdings in connection with ETH purchased on that exchange.
Do I need an Ethereum wallet?
While private wallets are recommended it is not necessary to own an Ethereum wallet to store Ethereum. There are a number of exchanges and custody services that will store Ethereum on your behalf. It should however be noted that trusting a third party with your Ethereum holdings poses some risk, as you may lose your Ethereum.
Can Ethereum be mined?
Ethereum can still be mined until the Ethereum blockchain completely transitions from Proof-of-Work to Proof-of-Stake.
What is Ether?
Ether or ETH is the currency used within the Ethereum network. Many people use Ether and Ethereum synonymously to refer to the cryptocurrency.
What is GAS?
GAS is a separate unit within the Ethereum network used to pay for Ether transactions and the execution of smart contracts.
What is an ERC-20 Token?
ERC-20 is a technical standard for smart contracts used to create tokens on the Ethereum blockchain.
What is the difference between Ethereum and Ethereum Classic?
Ethereum Classic was born after Ethereum split into ETH and ETC after the DAO hack through a hardfork.