All about Ethereum
Ethereum is a kind of worldwide and decentralized computer. Smart contracts and the execution of decentralized programs is possible with Ethereum, for example.
If you want to use the Ethereum computer, you have to use the internal cryptocurrency Ether (abbreviated: ETH).
Who Invented Ethereum?
In 2015 the development team, consisting of Vitalik Buterin, Gavin Wood and Jeffrey Wilcke, published the project. Above all, Vitalik Buterin, the child prodigy who was born in Russia on January 31, 1994, receives a lot of attention for his work.
Ethereum vs Bitcoin
This video explains the differences between Ethereum and Bitcoin: https://www.youtube.com/watch?v=0UBk1e5qnr4
Buy Ethereum
You can buy ether either at an exchange, an exchange office or privately. An exchange office sets a price (slightly more expensive than the market price), while a stock exchange lets market participants determine the price.
Store ether safely
If you want to buy ether, you have to be familiar with your craft. And what you need to handle Ether is a secure wallet. With Ethereum, you are your own bank and responsible for the safety of your money. Therefore, you should get a secure wallet so that your ether can be stored safely.
Is Ethereum safe?
ETH is currently secured by the Ethereum blockchain, much like Bitcoin is secured by its own blockchain. The enormous computing power contributed by all computers on the network verifies and secures every transaction, making it virtually impossible for any third party to interfere with them.
The basic ideas underlying cryptocurrencies help make them secure: The systems do not require permissions and the core software is open source, meaning countless computer scientists and cryptologists have had the opportunity to study networks from security and all other aspects.
However, the security of applications running on the Ethereum blockchain is limited only by the level of security provided by its developers. For example, the code can sometimes contain bugs that can result in loss of money. Although the source code of these applications is publicly viewable, the user base of each application is much smaller than that of Ethereum as a whole and is therefore less controlled by people. It's important to research all the decentralized apps you plan to use one by one.
The Ethereum protocol is currently being updated in a way that makes it faster and much more secure. See the Ethereum 2.0 section below for more information.
How does Ethereum work?
You may have heard that the Bitcoin blockchain is very similar to a bank's ledger or even a checkbook. This blockchain is a scoreboard that keeps track of all transactions made on the network from the very beginning, and all computers on the network contribute their computing power to ensure that this scoreboard is accurate and secure.
The Ethereum blockchain, on the other hand, is more like a computer. While it provides documentation and security of transactions like the Bitcoin blockchain, it is much more flexible than that. Developers can use the Ethereum blockchain to develop a wide variety of tools, from logistics management software to games and the entire universe of DeFi applications (covering lending, borrowing, swapping and more).
To achieve all this, Ethereum uses a "virtual machine" similar to a giant, global computer made up of many individual computers running Ethereum software. Running all these computers requires investment in software and electricity by the participants. To cover these costs, the network uses its own Bitcoin-like cryptocurrency called Ether (or more commonly ETH).
ETH makes everything work. You interact with the Ethereum network using ETH while paying the network to execute smart contracts. As a result, fees paid in ETH are called "gas".
Gas prices vary based on how busy the network is. A new version of the Ethereum blockchain, called Ethereum 2.0, which aims to increase the efficiency of the blockchain, began to be made available in December 2020. (The transition to the new blockchain is planned to occur within the next two years.)
Conclusion
Ether undoubtedly has great potential, with the currency being tied to the growth of the Ethereum project. However, this also results in high volatility, which is common with cryptocurrencies. Extreme price fluctuations can therefore occur, which means that investments can lead to high profits in a short period of time.