Ethereum is a decentralized smart contract computing platform that enables developers to build decentralized applications (dapps) on top of its public Ethereum blockchain. It’s by far the leading blockchain platform and is the second-largest cryptocurrency by market cap, right next to Bitcoin.
1. What is Ethereum?
Ethereum is a global, open-source platform and programmable blockchain that enables developers to write code that controls digital value, runs exactly as programmed, and is accessible anywhere in the world. Ethereum builds on Bitcoin’s innovation of a sound digital money without payment providers or banks with its own native cryptocurrency, Ether (ETH).
But unlike Bitcoin, Ethereum is programmable and its digital currency Ether can be used for more than payments. It can be used in decentralized financial services, games, and apps that can't steal your data. Also, since Ethereum is programmable, lots of different digital assets (including Bitcoin) can be used in Ethereum-powered applications and technologies as well.
Important Ethereum Features :
2. Who and When Created Ethereum?
Ethereum founder, Vitalik Buterin
Ethereum was first conceptualized in late 2013 by Vitalik Buterin who proposed a whitepaper titled, “Ethereum: A Next-Generation Smart Contract & Decentralized Application Platform”.
In this whitepaper, Buterin introduced an entirely new concept for blockchain technology, describing Ethereum as a distributed world computer for executing and storing computing programs.
Following the release of the Ethereum whitepaper, other developers and blockchain enthusiasts including Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, & Amir Chetrit joined Buterin in bringing Ethereum to reality.
Now, going back to the launch of Ethereum, the team held a public token sale of the project’s native cryptocurrency, “Ether” (ETH) in 2014 where they raised more than $18 million, making it the largest token sale ever commenced at the time.
Following the token sale nearly 1 year later, the Ethereum mainnet finally went live on July 30, 2015, and to this day (August 2020) Ethereum is still under heavy development.
3. What is $ETH Token Used For?
Ether (ETH) is the native cryptocurrency of the public Ethereum blockchain and it’s used within the Ethereum network and ecosystem.
Ether (ETH) Use Cases :
When you use an Ethereum application or send ETH, you’ll pay a small fee in ETH itself to use the network. Also, application developers building on top of Ethereum use ETH to pay for transaction fees and services on the network too.
These small fees are used as fuel to power and secure the Ethereum network because it is allocated to miners as an incentive to process and verify blocks (transactions) on Ethereum’s blockchain.
Also, miners get rewarded with small amounts of newly-issued ETH for running, securing, and decentralizing Ethereum’s blockchain network.
In other words, ETH powers Ethereum.
ETH underpins the Ethereum financial system
The global Ethereum community of developers and innovators are building a whole new financial system that's peer-to-peer and accessible to everyone.
This new financial system is often referred to as Open Finance or Decentralized Finance (DeFi), and ETH is often used as collateral to generate entirely different cryptocurrency tokens on Ethereum.
You can borrow, lend, and even earn interest on ETH and other ETH-backed tokens in this new decentralized finance system powered by Ethereum.
ETH is a digital store of value
Some people view ETH as a digital store of value because the mining of new ETH slows down over time and its value should theoretically increase as it’s utilized in more applications.
For instance, ETH is increasingly being locked up as collateral in DeFi applications, and when Ethereum 2.0 launches large amounts of ETH will be staked (locked up) to secure the network.
ETH can be traded
ETH is a tradeable digital currency that can be traded on most centralized and decentralized cryptocurrency exchanges. It’s also the second biggest and third most liquid cryptocurrency on the market and has more trading pairs than any other digital currency.
ETH is for payments
ETH can be used for peer-to-peer payments, meaning you can send ETH directly to someone else without any intermediary service like a bank. You can use ETH to pay an invoice or you can use ETH to pay for goods and services.
4. What is ETH 2.0?
ETH 2.0, also called Ethereum 2.0 or ‘Serenity’, is a long-anticipated upgrade to the public Ethereum mainnet.
The ETH 2.0 upgrade is major and will be released in multiple phases, with each phase improving the functionality and performance of Ethereum in different ways. Phase 0 is the first phase that’s rolling out in 2020 and the subsequent phases, Phase 1 and Phase 2, will be rolled out in the years to come.
5. What's the main use case of Ethereum?
As Ethereum stands today, its main use case is powering decentralized finance (DeFi) applications. As of August 6, 2020, there is $4.48 billion locked USD value in Ethereum-based DeFi applications and this number continues to grow.
So, what is Decentralized Finance (DeFi)?
Decentralized Finance, often called Open Finance or DeFi, generally refers to the financial software, protocols, digital assets, smart contracts, and decentralized applications (dapps) built on decentralized blockchain technology.
DeFi is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries, and the wide majority of DeFi dapps are powered by Ethereum.
6. Details on the ETH Token
Ethereum’s native cryptocurrency Ether (ETH) is an inflationary currency with a total and circulating supply of 112,068,383 ETH. Unlike Bitcoin, which has a capped supply of 21 million BTC, the supply of ETH is not capped.
As Ethereum stands today, newly minted ETH is rewarded to miners every time a block is processed, verified, and added to the Ethereum blockchain. It takes roughly 13 seconds for a block to be mined and block rewards are currently set at 2 ETH per block.
Through time, ETH’s rate of inflation is supposed to slow down, and when Ethereum 2.0 launches along with Proof-of-Stake (PoS), ETH will no longer be mined with computing power.
Instead, validators will deposit (stake) their ETH tokens and Ethereum’s PoS protocol will determine which participants get selected to validate blocks and earn the staking rewards.
Ethereum 2.0 will require validators to run a validator node and stake a minimum of 32 ETH to participate in the network. While it’s not yet set in stone, the rate of return for staking ETH is expected to be around 4%–10%.
Now, getting back to the ETH token itself, 1 ETH can be broken down into smaller units called Gwei. For instance, 0.000000001 ETH = 1 Gwei or 1 ETH = 1,000,000,000 Gwei (10^9).
7. Where to Store $ETH?
Ethereum (ETH) is a very well established cryptocurrency residing on top of the public Ethereum blockchain and you can store ETH in a wide variety of ERC-20 token supported wallets.
However, it’s best to store ETH in a wallet that makes it easy to hold and send ETH, as well as interact with applications built on Ethereum.
That said, here’s a list of wallets recommended for storing ETH from the official Ethereum website:
In addition to the above-listed wallets, Ethereum (ETH) can be stored on a wide variety of other reputable wallets supporting Ethereum and ERC-20 tokens.
