Blockchain is a new way of digital communication and transaction where everyone is powerful, and accountable, thus giving birth to the powerful democratic ecosystem for humans to thrive. This NoTrust System is really trustworthy and a new decentralized internet for the masses to go mainstream.
A group of people known by pseudonym Satoshi Nakamato gave this world a truly game changing technology, which now the world knows by the name The Blockchain : A chain of decentralized public ledger or database blocks.
As per Investopedia:
A Blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
Don & Alex Tapscott, authors Blockchain Revolution (2016) says:
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
This brilliant innovation has powered many blockchain system like bitcoin, litecoin, NEO, Ripple and many more digital currency. Today we will cover in detail about Ethreuem : A Comprehensive Blockhain Ecosystem which is empowering many blokchain powered innovative idea to capture the imagination of ingenious minds and the world as a whole.
We will uncover our journey in the following phases:
- What Is Ethereum After All ?
- What Is Ether?
- How Ethereum Works?
- Comparison Between Bitcoin & Ethereum.
- How To Invest in Ethereum & Market Stats?
- Infographics To Sum It All.
What Is Ethereum?
ethereum.org defines It :
As an open blockchain platform that lets anyone build and use decentralized applications that run on blockchain technology. Like Bitcoin, no one controls or owns Ethereum — it is an open-source project built by many people around the world. But unlike the Bitcoin protocol, Ethereum was designed to be adaptable and flexible. It is easy to create new applications on the Ethereum platform, and with the Homestead release, it is now safe for anyone to use those applications.
Young ingenious fellow Vitalik Buterin proposed in 2013 that a single blockchain with the capability to be reprogrammed to perform any arbitrarily complex computation could subsume these many other eventually in 2014 he together with his partners began to work, with a vision to implement a general, fully trustless smart contract platform which you now know as Ethereum, The system went live on 30 July 2015, with 11.9 million coins “premined” for the crowdsale.
As per wiki: In 2016, as a result of the collapse of The DAO project, Ethereum was split into two separate blockchains — the new separate version became Ethereum (ETH), and the original continued as Ethereum Classic (ETC).The value of the Ethereum currency grew over 13,000 percent in 2017.
EVM: Ethereum Virtual Machine:
Similar to other blockhain ethereum works on P2P Network Protocols where each blockchain database is maintained and managed by multiple nodes each connected to the P2P network. Each node running their own EVM executes the same instructions, That’s why Ethereum is sometimes described evocatively as a “world computer”.
The ethereum nodes runs the EVM to build a decentralized consensus across the Blockchain network making Ethereum Network
- Fault Resistant
- Ensuring Zero Downtime
- Making data stored in each block, unchangeable and censorship-resistant forever
2. Ether : Ethreum’s Own CryptoCurrency
Ethereum has its own cryptocurrency named Ether which they also call as
The crypto-fuel for the Ethereum network
It is the fuel which is empowering the distributed apps on Ethereum platform. If any client executes any transaction on ethereum P2P network he pays in the form Ether to fuel the trasaction. Ether is also an incentive for encouraging developer to write a high quality dapp’s to minimize the cost which goes into writing a crappy code, it inspires the developers to maintain the coding standards apt for building a healthy ethereum ecosystem.
How Are Ethers Created?
Ether went into a presale offer where(data sourced from: https://www.ethereum.org/ether )
- 60 million ether created to contributors of the presale
- 12 Million (20% of the above) were created to the development fund, most of it going to early contributors and developers and the remaining to the Ethereum Foundation
- 5 ethers are created every block (roughly 15 seconds) to the miner of the block
- 2–3 ethers are sometimes sent to another miner if they were also able to find a solution but his block wasn’t included (called uncle/aunt reward)
Note: That after the Byzantium update is implemented, the mining and uncle reward is reduced to 3 ethers and 0.625–2.625 ethers, respectively.
As per agreement by the platform stakeholders the max supply of ether has been restricted to : 18 million ether per year (this number equals 25% of the initial supply). This means that while the absolute issuance is fixed, the relative inflation is decreased every year. The rate is going to change in 2018–19, as the new platform is under development named Casper where ethereum is expected to change from proof of work. Casper is expected to be more efficient and require less mining subsidy.
3. How Ethereum Functions?
Ethereum while handling any transaction make use of the basic unit called “Accounts”. The state of each account in a blockchain is maintained together with the state, of amount being transferred and information of the accounts involved in transaction.
There are two types of accounts:
- EOA’s : Externally Owned Accounts controlled privately through Private Keys
- Contract Accounts: which are controlled by their contract code and can only be “activated” by an EOA
Bitcoin Account Vs Ethereum Accounts:
User who wants to transact over ethereum’s network using ether has to pay a small transaction fee, this has been done deliberately to maintain the platform decorum and protect it from frivolous or malicious computational tasks, like DDoS attacks or infinite loops. The sender of a transaction must pay for each step of the task they initiated, including computation and memory storage. These fees are paid in amounts of Ethereum’s native value-token, ether.
Miner’s : Rewards & Benefits
The transaction fees are collected by network nodes which act as a miners in the Ethereum Network.These miners receive, propagate, verify, and execute transactions. The miners then group the transactions — which include many updates to the “state” of accounts in the Ethereum blockchain — into what are called “blocks”, and miners then compete with one another for their block to be the next one to be added to the blockchain.
You must be thinking what is the reward for Miners to verify and validate the account owners, well they get Ethers for every successful mining of blocks which kind of, is an incentive for miners to invest their resources to power the Ethereums huge electricity needs.
How Miners Mines ?
Like Bitcoin network here also miners performs complex mathematical problems to be solved where they parse through all the chain of blocks to verify them as a Proof Of Work, Any computational problem that requires orders of magnitude more resources to solve algorithmically than it takes to verify the solution is a good candidate for proof of work. Once the block is verified it gets added into the Ethreum’s blockchain network.
4. Cryptocurrency Comparision Worth Doing:
A: Blockchain Based Comparison-
B: Bitcoin Vs Ethereum(Overall Comparison)
5. How To Invest In Ethereum?
Now when you know that ethereum has the potential worth to challenge the oldest cryptocurrency “Bitcon” you must be wondering how to invest in it ? Ether is a currency of Ethereum ecosystem which you as a investor will be trading as token, in exchange of your dollar or legal tender. So what is the process of buying it?
Buying Ether :
To buy an ether from the crypto exchanges you first need to have a secure digital wallet, Ethereum doesn’t trade on any major stock platform. You can’t go to your online discount broker and buy Ethereum. You have to convert it into your wallet.
It is recommended to try : Try Coinbase where you can sign up following this link and buy Ethereum , bitcoin and other currency to also store it in their secure wallet. It is also recommended that you after buying the Ether, store it in separate multi-currency offline/ hardware wallet to be extra protected against any miss-happening, I will be covering a few of those below later.
Here i am listing below,few other popular exchanges to trade Ether and other cryptocurrency:
Multicurrency Wallets : To Store Ether & Other Crypto’s
Exodus is a relatively new and unknown digital wallet that is currently only available on the desktop. It enables the storage and trading of Bitcoin, Ether, Litecoins, Dogecoins and Dash through an incredibly easy to use, intuitive and beautiful interface
Jaxx is a multi-currency Ether, Ether Classic, Dash, DAO, Litecoin, REP, Zcash, Rootstock, Bitcoin wallet and user interface. Jaxx has been designed to deliver a smooth Bitcoin and Ethereum experience. It is available on a variety of platforms and devices (Windows, Linux, Chrome, Firefox, OSX, Android mobile & tablet, iOS mobile & tablet) and connects with websites through Firefox and Chrome extensions.
3. Ledger Nano
The Ledger Wallet Nano is a new hierarchical deterministic multi-signature hardware wallet for users who are looking to store their currency and protect it from being hacked. In terms of hardware, the Ledger Wallet Nano is a compact USB device based on a smart card. It is roughly the size of a small flash drive, measuring 39 x 13 x 4mm (1.53 x 0.51 x 0.16in) and weighing in at just 5.9g.
- Screen/device protected by metal swivel cover
- Multi-Currency support
- 3rd-Party apps can run from device
- U2F support
- When recovering wallet from seed, the whole process can be done from the device without even connecting it to a computer!
- Fairly inexpensive (~$65 USD)
- Not as advanced wallet software (no transaction labeling)
- No ability to create hidden accounts
- No password manager
Well there are many more offline soft & hardware wallets which we will take separately in our next in the series of Cryptos…
Ethereum Market Stats As On 23 Feb 2018( Source)
Market Cap : $86,677,421,336 USD
Volume (24h): $2,380,350,000 USD
Circulating Supply : 97,794,946 ETH
6. Summing Up With Infographics Worth Referring !
A: Ethereum Simplified Explanation For The Dumb:
B: Ethereum Explained To Sum It All:
Ending with a food for thought:
I don’t know how much money will be made or lost in the process of adopting this blockchain powered digital economy, but one thing is for sure going to happen, humans will become more powerful both economically and socially by transacting and exchanging values, which this decentralized system has to offer, to this current and upcoming generation
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