The popularity of cryptocurrency is increasing at a rapid pace. Despite it being a relatively new industry, even new investors are lured to this due to the quick profits. If you are among those who have just started treading the waters of digital currency then you would have heard buzzwords like Ethereum, Bitcoin, etc. It is essential to know a good deal about it before investing as it is extremely volatile. In this guide, you will get to know all about Ethereum, a popular cryptocurrency after Bitcoin.
What is Ethereum?
Ethereum is a BlockChain technology that is open-source, decentralized, and comes with the functionality of smart contracts. Since it is open-source, developers can use it to create many digital applications and cryptocurrencies. The native currency of this is Ether or ETH. That is the reason when you try to buy Ethereum from investing websites you would see Ether, ETH to INR, or other currency based on your region. In terms of market capitalization, Ether is the second best with Bitcoin being the first.
How does BlockChain technology in Ethereum work?
For you to understand how the Ethereum blockchain works, it is essential to know how it works in general. Blockchain technology is a way of linking together digital records stored on groups of computers. Since the entire record of transactions is present in every computer of a group, even if there is a failure in one the records are present in others. Typically, in a group, there are thousands of computers connected.
The recordkeeping is transparent, public, and decentralized with no authority to control the network. Cryptographic principles are used to prevent the records from being altered. So if anyone wants to alter a record maliciously, every computer that is part of the network needs to be changed, Also, every transaction undergoes extensive mathematical verification.
Now coming to the blockchain technology in Ethereum, it is used to do more than just transact cryptocurrency. It is used to create and distribute blockchain applications even to outside developers. Hence this platform is called Ethereum Virtual Machine.
Important Aspects of Ethereum
Ethereum is a platform that is multi-faceted and has many aspects. Some of them are:
- Smart contracts: It is similar to regular contracts but the difference is that the agreement terms are written into the code. The contract is executed automatically. It has an extensive range of functions when compared to other contracts.
- Mining: Using blockchain reduces the need for banks and other financial institutions. But how to ensure that the transaction is valid. Validation is a process, where the legitimacy of every new transaction is verified. A transaction is considered valid when it meets the predefined criteria. Though every node can validate a transaction, not every node participates. Those who validate are called validators and the process is called mining.
- DApp: Decentralized application, DApp is an app built on a decentralized network. It comes with a user interface and a smart contract.
How to buy Ethereum?
This cryptocurrency can be brought from a digital currency trading platform. There are many platforms with each one having a different Ethereum price, security features, and other services. Do research before opening an account with them. After creating the account, you should fund it and then make a purchase. You can sell it when the ETH price is high.
Ethereum is touted as the future of blockchain technology. That means many industries are likely to benefit from this decentralized platform. Hence if you are considering investing in it, now is the right time!