Ethereum (ETH) is the second most popular cryptocurrency after Bitcoin. It is Founded by Vitalik Buterin and Gavin Wood in 2015, today Ethereum’s market capitalization represents approximately 20% of the $1.1 trillion global crypto market.
Ethereum is a decentralized, open-source blockchain platform that enables developers to build and deploy smart contracts and decentralized applications (dApps). It was proposed by Vitalik Buterin in late 2013 and development began in early 2014, with the network going live on July 30, 2015.
It’s distributed in the sense that everyone participating in the Ethereum network holds an identical copy of this ledger, letting them see all past transactions. It’s decentralized in that the network isn’t operated or managed by any centralized entity—instead, it’s managed by all of the distributed ledger holders.
Characteristics of Ethereum
Decentralized Platform:
Ethereum is a decentralized platform that enables the creation of smart contracts and decentralized applications (dApps).
Smart Contracts:
These are self-executing contracts with the terms of the agreement directly written into code. They automatically enforce and execute the terms of a contract without the need for intermediaries.
Turing-Complete:
Ethereum’s programming language, Solidity, is Turing-complete, meaning it can execute any computation that can be performed by a Turing machine.
Open-Source:
Ethereum is open-source, allowing developers to review, modify, and distribute the code.
Ethereum Virtual Machine (EVM):
This is the runtime environment for executing smart contracts on Ethereum. It ensures that all transactions and smart contracts are processed in a consistent manner.
Ether (ETH) Token:
Ethereum has its own cryptocurrency, Ether (ETH), used for transaction fees, smart contract execution, and dApp interactions.
Gas System:
Ethereum’s gas system measures the computational effort required to execute transactions and smart contracts, preventing network spam.
Interoperability:
Ethereum’s architecture allows for interoperability with other blockchain networks and legacy systems.
Constant Evolution:
Ethereum’s development is guided by the Ethereum Improvement Proposal (EIP) process, ensuring continuous improvement and innovation.
Proof of Stake (PoS):
Ethereum is transitioning from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) system, known as Ethereum 2.0. This transition aims to improve scalability and reduce energy consumption.
Security:
Ethereum’s decentralized nature and cryptographic algorithms ensure a high level of security for transactions and smart contracts.
These features make Ethereum a robust platform for building decentralized applications, decentralized finance (DeFi) solutions, and non-fungible token (NFT) marketplaces.
Ethereum has become a foundational platform for various innovations in the blockchain space, including decentralized finance (DeFi), non-fungible tokens (NFTs), and more. Its flexibility and programmability make it a popular choice for developers looking to build on blockchain technology.
How To Buy Ethereum
It’s a common misconception among people new to the Ethereum network. You don’t buy Ethereum itself that’s the network. Instead, you buy Ether and then use it on the Ethereum network.
Pick a cryptocurrency exchange.
Crypto exchanges and trading platforms are used to buy and sell different cryptocurrencies. Coinbase, Binance.US and Kraken are a few of the larger exchanges. If you are just interested in purchasing the most common coins like Ether and Bitcoin, you could also use an online brokerage like Robinhood or SoFi. Be prepared to pay some amount of trading or processing fees almost universally.
Create an Account
Once you’ve chosen an exchange:
- Sign Up: Provide your email address and create a password.
Verify Your Identity: Most exchanges require identity verification to comply with regulations. You’ll need to provide personal information and upload identification documents (e.g., passport, driver’s license).
Secure Your Account
Enable Two-Factor Authentication (2FA) which adds an extra layer of security to your account.
Deposit fiat money.
You can deposit cash, like dollars, in your trading platform or link your bank account or debit card to fund purchases of Ether.
Buy Ethereum
- Navigate to the Buy Section: Go to the trading or buy section of the exchange.
- Select Ethereum (ETH): Choose Ethereum from the list of cryptocurrencies.
- Enter the Amount: Specify how much Ethereum you want to buy or how much fiat currency you want to spend.
- Review and Confirm: Double-check the details of your purchase, including fees, and confirm the transaction.
Use a wallet
While you could store the Ether in your trading platform’s default digital wallet, this can be a security risk. If someone hacks the exchange, they could easily steal your coins. Another option is to transfer coins you aren’t planning on selling or trading soon into another digital wallet or a cold wallet that’s not connected to the internet for safety.