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If you’re reading this, then you are most likely well aware of the growing popularity of the cryptocurrency Ethereum. After all, it was just a couple of months ago that this digital coin wasn’t even worth mentioning. However, not only has its value skyrocketed in the past few months but so too has its usage. And for good reason too - it is helping to solve an ever-growing number of issues from being able to run decentralized applications without the risk of fraud and censorship, to creating cheaper and more efficient ways to trade goods and services across different parts of the world. For those who aren’t familiar with Ethereum, then you may be wondering what makes it so popular right now. Well, we will explain below!
What is Ethereum?
Simply put, Ethereum is a third-party blockchain network that allows people to build decentralized applications (DApps). Unlike Bitcoin, which is a peer-to-peer digital currency, Ethereum is a decentralized platform that can be used to build decentralized applications. Unlike Bitcoin’s blockchain network, which keeps a permanent record of all transactions, Ethereum uses a blockchain network that is designed to be flexible and can be used to store different types of data, including smart contracts. Ethereum was created by “Satoshi Nakamoto” the pseudonymous creator of Bitcoin. However, most people attribute Ethereum’s creation to a cryptocurrency developer who goes by the pseudonym of “Vitalik Buterin”. Vitalik Buterin has claimed that he is not Satoshi Nakamoto and that he did not create Ethereum, but his involvement with the Ethereum project is undeniable.
Vitalik Buterin, a Canadian cryptocurrency researcher, published a whitepaper outlining the fundamentals of a decentralized smart contract network. Buterin was originally trying to create a new type of digital currency that was not controlled by any single entity like a central bank. The idea was to use the power of distributed computing to create a public blockchain network that could help run decentralized applications. The Ethereum network was first launched in July 2015 and then launched its first official cryptocurrency, Ether, in July 2016. Over the next couple of years, Ethereum received a lot of attention from a lot of people. But this attention was short-lived, as people started to lose faith in Ethereum in early 2018 as they started to realize that it was facing a lot of challenges that were probably beyond the scope of its developers to solve.
How Does Ethereum Work?
Like most cryptocurrencies, Ethereum works through blockchain technology. This means that Ethereum is a decentralized network where users can create applications (DApps) using the Ethereum blockchain. These DApps are stored on the Ethereum blockchain, which means that all users of the network can verify and confirm their transactions. This decentralized network also allows users to create their own “crypto coins”, which are digital tokens that can be used to buy and sell goods, manage digital assets, and support various types of DApps. Unlike Bitcoin’s blockchain network, which keeps a permanent record of all transactions, Ethereum uses a blockchain network that is designed to be flexible and can be used to store different types of data, including smart contracts. A smart contract is a computer code that executes when specific conditions are met. For example, a person in Sweden can buy a house in England with a smart contract that automatically manages the legal details of the agreement, such as the ownership of the house.
Ethereum Benefits
- Low-cost, secure transactions: Ethereum’s blockchain network uses a process called “crypto mining” to verify and confirm transactions on the network. In this process, computers on the network validate the transactions and are rewarded with new Bitcoins or Ethers. Through the use of crypto mining, the Ethereum blockchain network can be very secure, as it is decentralized and there is no single entity that can become service-dependent to gain control of the network.
- Decentralized applications: The popularity of Ethereum and the use of blockchain technology has led to the development of thousands of decentralized applications (DApps), which can be accessed and accessed through the Ethereum network. Using a decentralized app is a great way to avoid the risk of fraud and censorship, as these apps are not controlled by a single entity.
- Low-cost, near-instantaneous trades: Because of the decentralized nature of the Ethereum blockchain network, users can make trades without having to go through a middleman like a bank. In most exchanges, you will wait for several days, weeks, or even months to make a trade, which can be very inconvenient, especially in a crisis.
- Low-cost, cross-border payments: The decentralized nature of the Ethereum blockchain network allows for the easy creation of international payment channels. Through the use of smart contracts and decentralized applications, users can set up a system that allows for instant transfers of funds between different parties around the world.
Ethereum Disadvantages
- Weak developer community: One of the main challenges facing Ethereum is that many people have started to believe that this network is not ready to handle high volumes of transactions, especially in terms of high-frequency trading. Due to the fact that it is still very difficult for developers to create applications that can be deployed to the Ethereum network, many people have started to turn to popular alternatives such as IOTA and Hyperledger.
- Lack of scalability: It is hard to argue that the Ethereum network can handle large volumes of high-frequency trading. Most people believe that the best way to solve this issue is to create more networks that can handle different types of transactions, which is possible with Ethereum, but it is difficult for other networks to join the Ethereum network for similar transactions.
Final Words: Should You Buy Ethereum Now?
Ethereum is a great investment for anyone who wants to take advantage of the growing popularity of decentralized applications. If you are interested in investing in digital coins, then you should definitely consider buying Ethereum. It has seen significant growth in the past few years and could continue to be one of the most popular coins in the future due to its benefits as a decentralized applications platform and upcoming merge. You could invest in Ethereum by purchasing coins on an exchange or by purchasing tokens directly from a wallet. It is important to remember that investing in cryptocurrency is not for everyone, so you should only invest money that you are willing to lose. If you are thinking about buying Ethereum, then you should think carefully about whether or not it is right for you.
