In common parlance, “ether” and “ethereum” have become synonymous, although they are not the same thing.
Etherium is a complex, decentralised application platform based on blockchain technology. In simple terms, Etherium is a large open-source database available to all. The official website of the platform is ethereum.org.
Ether (ether, stock ticker ETH) is a token inextricably linked to Ethereum. Specifically, ether is received as a reward by the operators (miners) who keep the network running. Ether is often referred to by the term “cryptocurrency,” although it is more correct to refer to it as a token that gives the right to use the services that are provided in the Ethereum platform.
How the Ethereum Network Works?
Bitcoin and ether are both blockchain-based. Both BTC and ETH appear as a result of mining – computer operations necessary to keep the blockchain (blockchain) network running. Each block in the Ethereum network has a unique 64-digit code, and stores so-called “transactions” – facts about the interactions in the network.
Before a block can be written into the public Ethereum network, it must be verified, which is done by miners. Mining uses the principle known as Proof-of-work. It involves resource-intensive, time-consuming calculations, the result of which is easy to verify. Therefore, the network is fast and virtually impossible to hack.
However, Ethereum developers plan to use the alternative principle of Proof Of Stake, which requires less energy, makes mining more accessible and gives more opportunities for scaling. The transition to Proof-of-Stake (PoS) will mark the arrival of Ethereum 2.0, but when that will happen is still (at the time of writing) unknown, they say – in 2022.
What are Smart Contracts, Advantages and Disadvantages
They are more like computer programs than contracts in the usual sense. Smart contracts allow people to create and run their own decentralised applications.
Imagine that a dApp is the interface of a website and a smart contract is the server side of it. Smart contracts are stored in the Ethereum blockchain, and if certain conditions are met, they can execute on their own.
Once a user adds his dApp to the network, it cannot be deleted because the network cannot be edited and controlled by a single participant. This can be a disadvantage for those who want to use Ethereum.
On the other hand, smart contracts allow anonymity and fight censorship by governments and dependence on third parties. This could be an advantage.
Is it Worth to Invest in ETH?
Ether is the cryptocurrency of the Ethereum network, which is the “fuel that powers the network. Anyone can:
- Invest in the Ethereum network by buying ether on a cryptocurrency exchange for long-term holding.
- Buy and sell ethers, earning from speculation.
In 2015, one ether was worth less than a dollar; in 2021, it was trading above 4,000.
The great demand for ETH has led to a boom in NFT, the non-interchangeable tokens used to sell works of art and other unique works. Artists, for example, are making millions of dollars transferring their paintings to blockchain using NFT because the format:
- Contains proof of ownership
- Serves as a secure form of storage
Despite the positive news and the fact that the ETH/USD exchange rate is showing impressive growth in history, it does not mean that you need to urgently buy ether for the entire amount available. Past performance does not guarantee the continuation of the future trend. Also, the Ethereum network has rapidly developing competitors – PolkaDot, Cardano and others.