What is Ethereum ? A Step-by-Step Guide?

What is Ethereum ? A Step-by-Step Guide?

  • 30 September 2020
  • 294 View

Ethereum is a worldwide and distributed system for managing digital currency and new types of software procedures.

In response to “what is Ethereum”, we should say that it is an open-source code that allows the users to develop software codes to control assets. Also, everyone can access these programs from anywhere in the world.

In November 2013, Vitalik Buterin released the preliminary paper about what is Ethereum as a whitepaper for introducing this cryptocurrency. The main ETH creation team, in January 2014, announced its platform development in public.

Who is the creator of Ethereum?

In November 2013, Vitalik Buterin released a documentary document introducing “What is Ethereum” as the White Paper. Buterin is the youngest, most creative, and founder of Ethereum, who at the age of 18 first offered to reform Bitcoin, but because his suggestions did not apply to Bitcoin, he published the initial report introducing the Ethereum network.

After the publication of the White Paper, a group of well-known thinkers in the field of the blockchain came together with Vitalik to exchange views and discuss the criticisms and fundamental errors in the concept of Ethereum through consultation. Since they begin to explain “What is Ethereum,” they were going to elevate Ethereum. Then they found solutions for them. After various meetings, they came up with new ideas and made changes to them. After acquiring the appropriate programming language, new methods were used to use ether and Ethereum blockchain.

In January of the following year, 2014, the team has publicly announced the development of the Ethereum platform. The main Ethereum development group consists of Vitalik Buterin, Mihai Alice, Anthony Di Iorio, and Charles Hoskinson.

What are the uses of Ethereum?

The ETH network allows developers to generate and deploy decentralized, extended routines. Each decentralized program or Dapp fulfills a specific purpose for users. Bitcoin as a Dapp can provide users with a peer-to-peer electronic cash system and online payment of BTC.

As it said in “What is Ethereum,” decentralized applications, or Dapps, are programmed with code that runs on a blockchain network, so no person or central body can control it.

It is interesting to know that Ethereum can convert any centralized service to a decentralized service. As explained in “What is Ethereum,” it can be used in all of the intermediary services available in hundreds of different industries. For instance, explicit services provided by banks such as borrowing, and buying Ethereum to intermediary services. Or other services that are rarely thought of by many people, such as registration, voting systems, regulatory systems such as Police and court.

What is Ethereum’s purpose and what factors does it depend on?

Since the beginning of 2016, those interested in the cryptocurrency industry have been eagerly awaiting the development of the next generation of Ethereum cryptocurrency operating systems. As a relatively new development using bitcoin technology, Ethereum intends to implement a decentralized, non-proprietary digital computer to execute peer-to-peer contracts. This project aims to become a global computer that you can’t turn off.

This combination of cryptographic architecture and the completeness of Turing will be able to create completely new industries. In turn, traditional business models, in which intermediation plays an important role, can come under increasing pressure in the face of new initiatives that do not require intermediation.

Proponents of the new Ethereum technology say the innovation could eliminate censorship, fraud, and the role of third parties in online transactions.

What is Ethereum mining?

The answer to what is Ethereum mining question is a new coin that is produced through a procedure named “Ethereum mining.” The nodes in the blockchain should examine the proceedings of transactions, after that, they are gifted with a new coin. For example, an Ether node (the miner) gets new Ether as a reward.
The act of producing a new coin (mining Ether) because is like extracting gold by digging the ground. In this activity, the miners approve the deals and get coins.

The method of Ethereum mining is ‘Proof-of-Work’ or PoW mining. In this way, the nodes that want to get new Ether as a reward should verify and approve the transactions that have been proceeded in the network. PoW mining, however, is using much electrical power for solving mathematical functions.
As the ETH developer team announced in their guide of “what is Ethereum” recently, they will be able to use another way called PoS or Proof of Stake soon. This method consumes less energy power, so the electricity costs of this method will be lower and it is much better to protect the environment.

In the PoS method, users with a large number of Ethers are randomly selected to review transactions. In this type of mining, instead of the new coin, they will earn rewards with additional payments. They will also consume much less electricity. Users that are selected to verify transactions in PoS are called Stakeholders.

What are the differences between ETH and BTC?

As explained in “What is Ethereum”, both ETH and BTC are based on a public blockchain network. But there are considerable technical differences between the two currencies, as below:

  • Bitcoin and Ether are fundamentally different in terms of goals and abilities.
  • Bitcoin presents only one specific usage of blockchain technology. That is a unique electronic cash mechanism that enables payment via an interconnecting network of BTC. Instead of offering a limited set of operations, Etheruem blockchain allows developers to create as many different operations as they want.
  • Bitcoin is tracing the possession of digital currency. However, ETH concentrates on executing procedures code of other distributed programming languages.
  • ETH, like BTC, is currently being produced by the Ethereum mining method and the proof-of-work algorithm. However, it is moving towards Proof of Stake as Ethereum 2.0. In Proof of Stake, users approve transactions based on the amount of capital they have in the network and gain rewards for doing so.

What is the performance of the smart contract in Ethereum?

The greatest revolution made by ETH was the development of smart contracts. A smart contract is just a term for describing “Ethereum programming code”, and can make the process of exchanging money or any assets.

When a smart contract executes on a blockchain, it is like an automated computer procedure that runs by itself. Because smart contracts run on the blockchain. They act completely according to planned algorithms and execute without any malfunction, deception, or third-party interposition.

The banking transactions are intelligent, meaning, for example, the central bank can prevent a transaction. In smart contracts on the Ethereum blockchain, a person or entity is not able to control the contract. Therefore, the execution is completely by itself.

What is the performance of the smart contract in Ethereum?

Where to buy Ether?

Users can buy Ether in 3 major places:

  1. Brokers are the currency exchanges that buy and sell Ether and get fees from the sides of deals. Working with them is easy to use. Users can buy ETH with traditional currencies such as USD or EUR and so on by using bank transfer or card banks.
  2. Trading websites that users can trade through them. They can get information about “what is Ethereum”, and also buy or sell digital currencies. Further, they can swap them with each other.
  3. Peer-to-peer operating systems let the buyers and sellers communicate with each other and fasten agreements on prices. This case is riskier than the above options because you are dealing directly with an unknown person. There is no intermediary, no fees, and you can also use cash.
What are the benefits of decentralized platforms like Ethereum?

In answer to the question of “what is Ethereum and what are the benefits of its platform,” the following benefits can be listed:

  • Due to the lack of intermediaries, it is not possible to change the data by third parties.
  • Programs are based on consensus networks, so there is no possibility of censorship, network intrusion, or data destruction.
  • This platform operates without the control of any central body and the encryption codes guarantee its security.
  • As explained in “What is Ethereum,” decentralized programs are running non-stop all the time and no one can stop them.
  • All centralized services can be converted to decentralized services by Ethereum technology. The services that are currently provided by the intermediary will be decentralized with the help of ETH Blockchain.
  • Using this crypto platform, various service organizations and companies can give credit to their businesses and gain consumer trust.
  • Given the value of data in today’s world, decentralization will inevitably take place.
What factors affect the price of Ethereum?

There are currently some factors that affect the price of Ethereum, which are as following:

  1. According to a basic economic principle, supply and demand are the most important determinants of the price of cryptocurrencies. The value of the cryptocurrency with a high token meets low demand from traders. So human emotions strongly influence the price.
  2. Ethereum price is controlled not only via profitable transactions but also through the profitability of mining. At current price levels, the profit margin from Ethereum mining with a mid-range graphics card is around $ 80 a month.
  3. Another point to note about the asset price is the fact that the tough stance of some governments as the Chinese and South Korean governments has led to a decline in investment, and some cryptocurrency users want to exit the market.
  4. Increasing the interest in cryptocurrencies has also put pressure on current market performance and the coin’s price. Numerous exchanges have begun to stop accepting new users. Bitfinex, for example, temporarily cut registrations in December. The strategy of exchange offices is to maintain the price trend of Ethereum.
What are the advantages of Ethereum?

As explained in “What is Ethereum” the benefits of Ethereum are as below:

  • The Ethereum platform uses all the specifications and performance of Ethereum blockchain technology. This means that a third party can’t interfere in the transactions. Anyone can’t control all decentralized and DAO applications on the network.
  • Each blockchain network is based on the principle of consensus. This means that all nodes in the system must agree on any changes that may occur. This eliminates the possibility of fraud and corruption and leaves the network intact.
  • Vitalik Buterin decentralized the whole operating system, so there is no possible point of failure. As mentioned in “What is Ethereum,” all apps always stay online and never shut down.
  • The decentralized nature and cryptographic security make the Ethereum blockchain network well protected. It protects against possible hacking attacks and fraudulent activity.

One response to “What is Ethereum ? A Step-by-Step Guide?”

  1. mineradmin says:

    Very good Article. Can you tell us about the Ethereum 2.0 version and how Ethereum mining is applicable?

Leave a Reply

Your email address will not be published. Required fields are marked *