It is clear that the Ethereum arose from the will to apply the concepts of Bitcoin and blockchain to areas other than just money. As a result, Ethereum provides an open source platform for developers looking to create decentralized applications. That attracts developers looking for an easy introduction to blockchain projects.
While Bitcoin is a disruptive technology that defies PayPal and banks, Ethereum aims to use a blockchain to replace services provided by third parties (those who store data, transfer mortgages and are accompanied by complex financial instruments). This technology is much more than a currency; it is a platform for application development with the decentralized network.
Ethereum is more than an electronic money, as it enables decentralized transaction verification for any viable Turing Complete application.
The Ethereum is an innovative project with the challenge of being a “world computer” that will decentralize the client-server model.
An easy-to-understand example is an online document service such as Evernote or Google Docs. According to plans, with the Ethereum the owner is going to have full control over his data in this type of services.
The idea is that an entity has no more control over your notes and nobody can suddenly ban the application, temporarily removing all your notes. Only the user can make changes; no other person can do it.
In theory, it combines people’s control over information in the past with the ease of accessing information, which we are accustomed to in the digital age. Each time you save, edit, add or delete notes, each node in the network is updated.
A series of innovative features define the Ethereum.
As a result of its extended capabilities, the Ethereum comes with two types of beads. EOA, or “External Property Accounts,” which provide functions similar to Bitcoin, such as providing a balance protected by private keys. And “Contract Accounts,” which provide the “Complete Turing” language for application development that makes the protocol so desirable.
What is a blockchain network
A blockchain system consists of several connected computers, capable of generating, manipulating and storing the information in a decentralized way, where any action between two users has to be verified by other users of the network as having any validity.
But in 2013 a 21-year-old boy named Vitalik Buterin found that the technology behind the blockchain network could be used more smartly, and then began to develop what we now know as Ethereum.
The Ethereum, as well as the Bitcoin, is a decentralized network based on blockchain technology, with open source, operated and controlled by the users themselves.
But if the Ethereum works basically like Bitcoin, why has it stood out so much since its launch in 2014, on the verge of receiving millionaire investments from companies like Microsoft and IBM?
The answer is simple: although the Ethereum can also be used as an electronic currency, its applicability goes well beyond that.
The Ethereum platform allows developers anywhere in the world to create and distribute Smart Contracts, which function as computer programs programmed to perform functions under certain circumstances, such as transferring a certain amount of money each time a task has been fulfilled, send a particular file when requested by some user, and much more.
All this, of course, happening in a decentralized, secure and immutable network.
Imagine that you want to invest your money securely in a company located in Sweden, without having to engage with banks or government institutions.
With the Ethereum, a user (in this case, you) can create a Smart Contract directly with the company in Sweden, specifying that you want to receive 15% of the profits when the company’s gross income reaches USD 200,000.
The trend is that in the very near future, the blockchain will be a revolution as big as it has been the internet and one of the projects that are later about the blockchain is the Ethereum.
Differences between Ethereum and Bitcoin
With the Ethereum, Vitalik Buterin, the creator of Ethereum, has developed the first universal application of the principles underlying Bitcoin. Instead of using the blockchain as a way of establishing/providing value, the Ethereum offers the possibility of using this technology in a “Turing Complete” environment.
Bitcoin vs. Ethereum
Where Bitcoin implements blockchain technology in combination with the “Job Test” to form a coin, the value of the Ethereum is derived from the ability to create universal applications.
We also see differences between the way Ethereum and Bitcoin have implemented their decentralized currencies. Most notably, the BTC supply has a universal limit, while the ETH (ether) supply is limited annually by ETH 18 million, but there is no fixed limit.
Two types of Ethereum: Common and Classic
The Ethereum and the Classic Ethereum are different versions of the same block chain. The bifurcation served as damage control to the problem caused by the invasion of DAO by the hackers in 2016 and was fueled by ideological differences among the first workers of the Ethereum.
As the DAO accumulated $ 150 million in the Ethereum, but almost $ 50 million in the Classic Ethereum have been pirated, about 80% of the miners decided to make a hard fork in the blockchain.
The other miners remained with the starting blockchain, which we now call Classic Ethereum. That’s why there are now two coins based on Ethereum that can be used to trade.
The Ethereum Purse
The Ethereum has a standard purse, called Mist, which is used as a gateway for developers to use apps. The ethereal purses bags act as BTC. You can use the tools of the system or use the comfort of other purses that have the software in an easier to use.
In addition to Mist Wallet, you can also use Ethereum with online bags like MyEtherWallet.com, EthereumWallet.com, and EthAddress.
CLI (Command Line Interface) purses, such as Geth, provide advanced user functions. An Ethereum hardware wallet is also a good choice, such as Ledger Nano S.
Ether is the currency of Ethereum
The Ether is the money that circulates in the Ethereum network and is used as a payment method to use the resources of this network, and also through the transactions that occur in the platform.
How to buy the Cryptonet Ethereum
The purchase of Ethereum works the same as if you were buying any other electronic currency.
You can do this through exchange houses by GUI or use API. You can even send and receive Ethereum directly, which means you can work with the particular currency with clients or friends without having to pay an additional fee for the negotiation.
After all, the act of buying Ethereum is just exchanging Ethereum for another currency. It is up to you to use a change house or not.
However, the easiest way to buy it is a home exchange online. Although it is the second most prominent blockchain platform. It is much harder to find reliable local negotiation possibilities. Such as those provided by localbitcoins.com in the case of Bitcoin.
But if you are looking for a modest exchange house that operates in it. You will not have a few options.
Good places to start are Poloniex, Bitfinex, Kraken, and GDAX. These exchange houses, to a significant part, play the same role. Comparing rates and forms of payment. You can find the trade house that is the best for you.
The recommended website for creating the Ether wallet is My Ether Wallet. However, before beginning your transactions, make a study on this new platform to know the correct steps for the creation and the way to proceed.
After creating the wallet, you can change your Bitcoins, and for this, you will have to look for the exchange houses that work with crypto mining and make the transaction.
How to earn money with it.
decentralized peer-to-peer network
That is a decentralized peer-to-peer network, as well as the torrent. That is, you need interconnected computers to keep the system running and active.
To do this, taxpayers in the system must maintain their computers connected. As a way of appreciating and compensating the network, then distribute the encrypted coins called Ether.
In addition to Microsoft, banks in the world and even governments are showing interest in adopting this system, which will increase the price of Ether.
The Ethereum and its similarity to stock market shares
The term actions are commonly investigated about Ethereum. But the truth is that is not a type of work.
However, since the value is represented by a structure of free market supply and demand, Ethereum, as well as other blockchain implementations, actually act in the same way as the traditional actions we know.
There is, however, one important difference to be highlighted. Unlike shares, the decentralized nature of the Ethereum makes it less malleable by specific market fluctuations, making it more of a diversified asset.
Although the core team of it disappeared from the face of the Earth, Ethereum tokens should, in principle, maintain their value (at least until the lack of updates keep them out of date). Actions, on the other hand, live and breathe for the amount that the company has.
As a result, stock exchanges around the world are introducing the Ethereum into their trading options.
What is Mining and how does it work?
Now that has taken over the position of the second most dominant electronic coin in the market, you can find out how Ethereum mining works.
Ether mining is the accumulation through the validation of network transactions. More specifically, mining is participation in the validation of the operations that are performed to confirm all activities in the blockchain of Ethereum.
That can be done from all platforms, which means it is available for home computers as well as custom platforms. It’s easier to start with Unix machines than with Windows, especially when it comes to Ethereum.
The challenge of mining is to generate more money by collecting ETH than it is spent on electricity consumed to do this.
As a beginner, the best opportunity to make some money through mining is by participating in a mining pool. Otherwise, even the most expensive gaming board will be easily surpassed by the pros.
Several mining clients can help a company in Ether mining. From a miner provided by software and other CLI tools to powerful GUI applications that allow fine tuning and a clear view of all mining activities.
Hardware needed to do Ethereum mining
Since the implementation of the Casper Proof of Stake algorithm in Ethereum, ASIC hardware. Which is known to be particularly efficient for mining BTC? And other cryptos need as based on the “Work Test System,” can no longer be used for Ethereum.
As a result, Ether’s mining is limited primarily to GPUs. That excludes the use of Bitcoin ASICs that significantly restrict rewards for hobby-level miners.
That also makes the Ethereum interestingly favor the domestic consumer about the big investors. In any case, a similar field of action emerged, where capitalism still manifests itself in the form of miners betting higher, only buying much better equipment than the domestic consumer.
Therefore, you will need the following to assemble your mining equipment :
Motherboard: To allow the parties to communicate.
Graphics card: To process the participation test algorithm.
Storage (HDD / SSD): To store the blockchain and recently reviewed transactions.
Memory (RAM): To provide working memory for the mining program. You must be generous with your investment in RAM since the DAG file is always growing in size.
Power Supply (PSU): To provide power to the parts.
Ethernet: To receive recently validated transactions to be stored in the blockchain.
Keep in the thought that the graphics card plays the most important role in determining how profitable your platform will be.
Its mining pools significantly increase your likelihood of acquiring Ether. That happens because the probability of assigning the Ether, as it happens with another cryptocurrency. That is proportional to the relative productivity in the whole network.
The revenues received by the pool are divided among the participants, and the distribution agreements vary from pool to pool.
The payment types of a pool range from Pay Per Share (PPS) and equal payments (PROP) to dark algorithms. Such as the Single Geometric Method (DGM).
In addition to a mining pool, you will also need Ethereum mining software. And an Ethereum purse to receive your payments.
Cloud mining involves the management of mining facilities by a service provider. That is perfect for beginners who want to take the first step.
There are many types of cloud mining services for Ethereum. Typically, users acquire specific tokens from a website, which represent the rights to a certain amount of hash power. This power mixture acts as the mining power that the service will use to perform the user’s Ether extraction.
However, there are also distinct types of cloud mining services:
Hash power leased: the provider rents the hashing power for the client to collect the benefits.
Several messages can be found advising against the use of mining services in the cloud. Arguing that, ultimately, it would be more productive to buy ETH directly in a house of exchange. That should make you wonder why someone would offer an opportunity to earn Ether at a rate lower than what the resulting Ether would be worth.
Profitability of mining
The profitability of its mining depends on two key factors: hardware and electricity. The benefits of mining can vary widely. As the value of the currency may decrease, so can the cost of electric power and the hardware used.
The lively nature of the exchange rates of the expands for all types of mining of criptomonedas. However, with proper equipment and power, you can create a substantial income.
It can be argued that the Ethereum, due to its lack of ASIC mining hardware. That is relatively more accessible to anyone who has to mine as a hobby. However, as time progresses, the Ethereum seems to be following the same direction as the Bitcoin regarding saturation of the mining market.
You can help determine the benefits projected with the use of tools for calculating the profitability of Ethereum mining online.
Ethereum Mining Algorithm
The Ethereum uses the algorithm of Casper Proof of Stake instead of the traditional Test of Work used in Bitcoin.
The Proof of Stake (PoS) spends much less computational power to achieve the same end as the PoW. That implies that it should be a better alternative to the PoW algorithm used by Bitcoin.
Casper Proof of Stake is part of the cutting edge of PoS and prioritizes availability, or speed, over consistency. Which means reliability, resulting in faster validations with similar properties as a Job Test blockchain.
Where the Job Test makes use of hardware to provide computational value, the Participation Test requires an approach that frees the network from large energy requirements.
Instead of receiving rewards for mining, Ethereum miners gain rewards proportional to the transaction they are validating. Keep in mind that this has been the case since 2016, since before that the Ethereum also ran a Work Test system.
Is it worth investing?
There are many types of Ethereum mining. From cloud to hardware, but you can always find a better solution.