Ethereum (ETH) cryptocurrency overview

Ethereum (ETH) is a platform for creating decentralized applications using smart contracts on the blockchain. It has a variety of applications in many areas, among the main ones – the use of native ETH cryptocurrency as a means of value transfer, writing smart contracts, and conducting ICOs. Let’s try to understand in detail what Ethereum is, what it is for, how it works, and talk about the process of obtaining ETH cryptocurrency.

Contents

• History and application
• Features
• Ethereum 2.0
• Ethereum Wallet for cryptocurrency storage
• Where to buy Ethereum or exchange it for other currencies
• Ethereum exchange rate prospects
• Pros and cons of Ethereum
• FAQ
• Conclusion

History and application

The Ethereum project was launched in 2014; money for the development of the platform was raised through the Initial Coin Offering (ICO) process. A total of 31549 BTC were raised through token sales. The project turned out to be successful, so the investors made good money. One of the founders is a Canadian with «Russian roots», Vitalik Buterin.

The cryptocurrency Ethereum (short for ETH) or, as it is also called, Ether, is the second most capitalized currency after Bitcoin. It is the internal currency of the platform. The total market value (capitalization) of coins as of 12.07.2022 is more than 129.8 billion dollars, that is about 15% of the market; the value of 1 ETH = 1067 USD. It is traded on almost all crypto exchanges, including Binance, EXMO, Currency.com, OKEx, Huobi, Bybit, Cex.io, FTX.

Unlike Bitcoin, Ether has unlimited issuance, although the annual number of new coins is 18 million. The number of coins already issued is more than 121.5 million ETH.

According to the developers, Ethereum does not compete with Bitcoin, but complements it in the digital ecosystem. Smart contracts and the EVM virtual machine are important tools in the current infrastructure with which to being created and maintained:

• Decentralized trading platforms.
• Credit (lending platforms).
• Blockchain games.
• NFT- tokens.
• IDO-platforms (Initial DEX offering).

And many other projects related to finance, games, and useful features.

Features

Ethereum 2.0

Ethereum is set to complete its largest-ever protocol update in 2022. Developers want to move away from the Proof-of-Work (PoW) consensus mechanism to the more environmentally friendly Proof-of-Stake (PoS). The final stage is called Merge, when the already launched Beacon Chain will merge with the existing main Ethereum chain.

In the Beacon Chain, data coordination and production of new blocks will take place with the help of validators who receive economic incentives for their work in protecting the network. The Merge will reduce network energy costs by at least 99,95%.

The main reasons for the transition:

• Proof-of-Work in the long term is poorly scalable and has weak stability.
• Proof-of-Stake makes it possible for virtually everyone, not just large investors, to participate in supporting the network.
• Distribution of network rewards will be more equitable, despite the reduction in the ETH coin issuance rate by reducing the reward per block.

A combination of clients such as Besu and Teku will be needed to interact with the network after the merge. Both clients are being developed and tested. Existing decentralized applications will work as they do, with no changes for the average user.

The Merge will pave the way for the implementation of sharding technology to increase throughput. It will take time, so don’t expect an instant solution to scalability issues.

Ethereum wallet for cryptocurrency storage

Before you buy Ethereum, you need to create an Ethereum wallet to store your coins securely. There are several ways to do this but be sure that before making a large purchase or transferring Ethereum coins, you check wallets working capacity, by entering a small amount, and remember to keep your passwords and keys safe.

Types of wallets:

• Client programs for storing ETH on a PC (desktop wallets). Each operating system has different versions of the program and its bit rate. Some wallets require synchronization with the network, so that information on all transactions will be downloaded. The process is long and takes several hours. But there are also lightweight wallets that don’t download the blockchain. Examples of ETH wallets for PC: Coinomi, MyCrypto, AirGap, Exodus, Atomic.
• For mobile devices. Such wallets are always lightweight. They are as safe as desktop ones, provided that you ensure high security of the device itself. Examples: Trust Wallet, TokenPocket, MathWallet.
• Online (web) wallets. These wallets don’t require installation, they work in a browser, so they are the easiest type to use. Examples: EthWebWallet, MyEtherWallet. These are so-called non-custodial wallets – all login data is stored on the user side. Thus, browser wallets provide quite a sufficient level of security.
• Hardware wallets. The most secure method of storage. Your cryptographic keys that provide access to cryptocurrencies are stored independently from the Internet and are securely protected from potential hacker attacks. Examples: Ledger, Trezor.

It is not recommended to use a cryptocurrency exchange for storing Ethereum. After opening an account on the exchange, wallets are created for all supported coins. But it is recommended to use this method for short-term exchange operations (to buy or sell cryptocurrency) and thereafter transfer virtual coins to other wallets.

Where to buy Ethereum or exchange it for other currencies

Ethereum cryptocurrency can be purchased in several ways, the main ones are the following:

• Buying from online exchangers of electronic currencies is the fastest way to get Ether, the rate will be weighted average. The main thing is to choose a reliable exchanger. Some of the proven services: Prostocash, 60cek, Platov, Ramon Cash. Additionally to Ether, you can buy bitcoin (BTC), Dash (DSH), Zcash (ZEC), Litecoin (LTC), Dogecoin (XDG), and other coins.
• By purchasing Ethereum on a cryptocurrency exchange. You can use any reliable top cryptocurrency exchanges to exchange fiat currencies (euros, dollars, etc.) for any cryptocurrency. Quality platforms: Binance, EXMO, OKX, Huobi, Kraken, Currency.com.
• By making a purchase using a cryptocurrency wallet if it supports this feature. Examples: Trust Wallet, Matbea, Atomic.
• By using electronic payment systems that provide the opportunity to work with cryptocurrency (AdvCash, Payeer, Capitalist).
• By purchasing directly from another user by finding a suitable counterparty through a p2p exchange. For example: LocalCryptos, Bitzlato.
• By purchasing ETH via Telegram, with the help of special bots.
• By purchasing coins in cryptomats, which can be found in major cities.

In addition to buying in an exchanger or on an exchange, Ether coins can be obtained for providing services or paying for some goods, by mining or on special sites – Ethereum cranes, which, after a certain period of time, drop a small fraction of coins.

If there is free money and time, it can be profitable to assemble a “farm” – the purchase of special equipment (ASIC or powerful video cards) for cryptocurrency mining. Due to the increased complexity, it is impossible to earn Ethereum using an ordinary computer.

Ethereum exchange rate prospects

The exchange rate of Ethereum, like any cryptocurrency, is very volatile, so changes in a day can amount to several percent.

Since the beginning of 2017, many popular virtual coins, including ETH, have been growing and updating their maximum values.

At the beginning of 2022, its value fluctuated between $3,200 and $3,700. The price high of $4,878 was reached in November 2021, when the whole market was actively growing. Now (mid-July 2022) there is an uptrend after the market collapse.

The Ethereum exchange rate is greatly influenced by:

• State of the crypto market in general.
• Demand from investors (if there is demand – value increases and vice versa).
• Restrictions and prohibitions on the part of the authorities, or conversely, acceptance.
• Information about hacking of the exchanges has a negative impact.
• The main driver of Ethereum growth in 2022 is the upcoming transition to Proof-of-Stake and its associated benefits (faster and cheaper transactions).
• Unrestricted issuance of new Ethereum coins slows down the rate increase.

How the coin will complete 2022 depends on the combination of all these factors, but there are a variety of assumptions.

Bloomberg Intelligence analyst Mike MacGlough is confident that ETH will be worth $4,000 – $4,500 by the end of the year. Investor and founder of Token Metrics Ian Balina expects growth to $8,000.

Pros and cons of Ethereum

Pros:

• Ethereum is a “world computer”. The platform can run almost any blockchain application for various economic and social purposes.
• Ethereum is perfect for tokenization of assets, e.g. shares of companies.
• The platform enables free, anonymous and transparent applications.
• There will soon be a transition to PoS, which will make the process of working with the network more comfortable.

Cons:

• High competition. While Ethereum is transitioning to PoS (which has already taken several years), new fast and productive blockchains are emerging, some of which could become “Ethereum killers”.
• Potential security threats due to smart contract hacks. There have been precedents more than once.

FAQ

What is Ethereum?

It is a blockchain platform for launching decentralized applications and its native ETH cryptocurrency.

What are the benefits of Ethereum?

For the most part, the decentralized finance industry and partly GameFi are based on this platform. The potential for creating useful blockchain applications is almost inexhaustible.

How is ETH cryptocurrency used?

It is a key asset in the network, which is used to pay for transactions, launch smart contracts, etc.

What is a smart contract?

Program code that is executed only if certain predefined conditions are met.

What prospects Ethereum has?

An updated version of the network is expected to launch soon, with developers moving away from PoW mining to PoS staking.

Where to buy or sell ETH?

The most relevant options are crypto-exchanges, p2p-platforms, exchangers.

Where ETH can be stored?

Cryptocurrency is supported by most software and hardware wallets. It is better to choose non-custodial services, with storage of keys on the user’s device.

Conclusion

The cryptocurrency Ethereum has been rising and falling along with the rest of the crypto market for several years. However, most experts are optimistic about Ether in 2022 and beyond despite the price volatility. This is due to the many developments in the network, which will help make it faster and more efficient. The launch of Eth2 will have a significant impact on the rate, and that impact is likely to be positive. Another essential positive factor is the development of Web3, DeFi, GameFi, and NFT, where Ethereum plays a key role.