Ethereum issues the second-largest cryptocurrency globally. It is a software platform that aspires to decentralize the internet. So, you would never want to overlook the technology of Ethereum.
Although Bitcoin is leading the crypto race right now, Ethereum is not far behind. This article has all you must know about this platform before you invest.
What is Ethereum?
It is a software platform based on blockchain that hosts a payment system and decentralized app on its network. Here, on Ethereum, you can build distributed apps with no censorship or regulation. Further, the platform lets you conduct reliable and safe transactions with each other.
The blockchain technology-based Ethereum was launched in 2015. It replaced the centralized computer technology that was earlier used to store the data of people. Some examples of centralized computer systems include Google and Apple. They regulate the apps in their stores.
Amazon is another instance of a centralized computing system. It stores your data and credit card information. Here the entire system is governed by one entity, just like Apple. They censor, regulate and ban apps that do not follow the rules.
Drawbacks of centralized systems
The point of failure in a centralized computing system is single. It means cybercriminals are easily capable of hacking them. For example, the sensitive information of users stored on Amazon’s website is also on their servers. Hackers could steal your credit card number.
Advantage of Ethereum’s blockchain technology
Since Ethereum uses blockchain technology to decentralize its app store, users have all the power. So, you can easily modify your apps and access your data. The platform has no control over your information. Further, you can quickly sell and buy art, music, pictures, etc., on platforms like CoinmarketCap and Binance using Ethereum.
Also, the app store does not impose any regulations on the users. Even companies aren’t allowed to store their information on Ethereum. But the probability of getting hacked decreases considerably, thanks to blockchain.
Is Ethereum the same as ether?
Ether and Ethereum work together. But they aren’t the same. While ether is the cryptocurrency, Ethereum is just the technology. Consider ether as the actual online cash or the fuel used in the Ethereum network to empower it.
People who wish to invest in Ethereum can buy ether. They can easily get it on an exchange of cryptocurrency. Binance is a great platform that lets you create or buy goods like music and art.
You can even buy other services and products using ether. So, it’s similar to using other currencies like Bitcoin. Further, ether is a store of value to you. It is very similar to buying and holding gold.
What are smart contracts?
If there are two online parties, smart contracts act as regular paper contracts. They have some established terms and conditions. However, these are different from an old-fashioned contract. Smart contracts execute without any external need when the terms are met.
None of the participating parties need to know who is on the other side. There is no intermediary and hence, no illegal ways of cryptocurrency usage. The apps based on Ethereum are built on smart contracts. Further, it is an open-source project that isn’t owned by a single person. So, the network is huge.
Ethereum v/s Bitcoin
Although Bitcoin and Ethereum and Bitcoin both use blockchain to publicize and validate every cryptocurrency transaction, Ethereum is a software platform. On the other hand, Bitcoin is a currency. So, the purposes of Bitcoin and Ethereum are different.
The blockchain technology of Ethereum lets users build their platform. So, you stay liberated from central systems that have alarming security vulnerabilities and impose rigid regulations.
On the other hand, Bitcoin was built to introduce a new payment system and global currency. It is also built on blockchain technology but connects suppliers directly with the consumers. Moreover, it eliminates the need for a financial middleman and lowers the transaction fees. So, it’s like a bank.
The blockchain technology of Bitcoin accomplishes its goal to decentralize the cryptocurrency. So, instead of asking a bank or similar central power to verify, Bitcoin does the job. It has a network of miners (often in millions) to ensure that each transaction is valid.
However, through this validation and decentralization process, Bitcoin also becomes much slower. So, here Ethereum comes in the picture. It is faster than Bitcoin at confirming transactions. While Bitcoin has a million nodes, Ethereum has just a few thousand nodes or computers. The latter does the validating activity quicker than Bitcoin.
The average block mining time of Ethereum is just twelve seconds which is very quick. Compared to Bitcoin that takes around ten minutes of average block mining time, Ethereum is worth it. You can buy and sell art and other things on Coinbase using Ethereum as the currency.
Is it worthwhile to invest in Ethereum?
It varies from person to person. There is no right answer. So, an important thing to remember while investing in Ethereum or Bitcoin, or elsewhere is there are risks involved. Before adding it to your portfolio, consider the risks.
The availability of ether is becoming wider. These days, the news is talking volumes about its rising value. But you shouldn’t get too sucked in the speculation. Always consult experts and make a wise choice.
Cryptocurrency purchases may add something to your portfolio. But it is viewed as highly speculative and should be a small amount. Further, it is still early to say anything. While the technology of blockchain used in Ethereum is promising, the future holds answers as to which technology will win.
The blockchain technology that Ethereum uses has greatly contributed to the online exchange world. It has created a decentralized platform. The ether cryptocurrency acts as a fuel. You may invest in the Ethereum network by purchasing ether.
It is a speculative investment to buy ether, just as any other cryptocurrency. However, always do your research before planning to invest in any digital currency. Also, do not risk any more than you’ve made up your mind to lose.
Coinbase and WazirX are great platforms to buy and sell using Ethereum. Moreover, if you are keen on cryptocurrencies, you can invest in companies that do more than purchase a single currency. But always be far-sighted while making an investment, whether in the offline or online world.