What is Ethereum?
Ethereum is a public blockchain platform that can run smart contracts. It is a decentralized virtual machine that executes peer-to-peer contracts without the need of a third party. Ethereum was proposed by an anonymous individual or group in late 2013 and its first live version was released in 2015. Ethereum as observed by Fintalent’s Ethereum Consultants, has gone on to be one of the strongest cryptocurrencies alongside Bitcoin.
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. These apps run on a custom built blockchain. The first successful implementation of smart contracts was the Ethereum Virtual Machine in 2000. It allowed anyone to create and execute programs using their own language (code) and storage media (memory). Ethereum has now become the most popular cryptocurrency in the world because it has successfully implemented these revolutionary technologies with its own currency, Ether, which is also used by other cryptocurrencies like Bitcoin
Issues with Ethereum
The main issue with cryptocurrencies is their volatility. They can change in value from one minute to another due to supply and demand fluctuations. For example, on January 1st 2017, the price of a bitcoin was around $1,000 USD but on January 1st 2018 it was around $13,000 USD and further fluctuations have been observed to date. This can be risky for investors and buyers. Therefore, the Ethereum development team created a way to reduce this volatility by using the Ethereum blockchain. As explained before, the Ethereum blockchain uses smart contracts which have no human interference and are able to execute themselves without interruption. The Ethereum Foundation is a non-profit foundation that is the developers’ and backers’ behind the Ethereum blockchain. The main purpose of its existence is to promote the development of smart contracts technology.
In order to create an economy based on Ethereum, you need to first create your own cryptocurrency. This might look like a complicated task but it’s actually very easy. All you need to do is install the free client for your preferred client platform (Linux, Windows, macOS, or even mobile phone) and follow some simple instructions. You can choose from different mining software like CGMiner & BFGMiner among many others. Like Bitcoin, everything that happens inside these networks is saved on a transparent distributed ledger called ‘the blockchain’. This means that there are no third parties involved, this is the most popular benefit of the blockchain technology.
Once you have your own cryptocurrency and a mining software installed, you can start mining by choosing a pool from mining pools list. One of these pools is F2Pool, one of the biggest mining pools in the world that supports many cryptocurrencies including Ethereum. You can mine for your own currencies like Bitcoin or Ethereum but it might be worth to switch over to other coins like Dogecoin if you have some spare processing power available. Some miners might also prefer to mine altcoins such as Litecoin or Vertcoin instead of Bitcoin because they can make more money with this alternative crypto-coins.
Mining might sound complicated but it is actually very easy to do. It’s a way of generating new cryptocurrencies while helping the networks and platforms grow. The more people mine, the stronger the networks become with higher hash rates and better security. Mining is crucial for these platforms to work properly. The currencies are all built on code which means that a program defines how coins are created and distributed. When you mine for a cryptocurrency, you can either choose one of the already established coins like Bitcoin or Ethereum or you can create your own coin by forking an existing one like in the case of Litecoin which is based on Bitcoin’s code but with some variations to it.
Ethereum’s code is immutable and cannot be manipulated or hacked by any outside party because its decentralized network serves as a trustless consensus mechanism allowing it to run forever. Once programmed into the blockchain, there is no way for anyone to change or remove this code, so this ensures its immutability and security. It’s a trustless network because no one controls it, meaning that you don’t have to trust anyone with your assets.