What is Ethereum and how it works

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Our site is not just reviews of Ethereum casinos, we will also tell you how this cryptocurrency works.

How Ethereum Works: A Simple Guide to the Largest Altcoin, Including Price History and Predictions for 2021

Each protagonist needs a competitor, and in the case of Bitcoin, this is Ethereum (ETH), or, as it is called in Russian, ether. While the ETH cryptocurrency is significantly smaller in terms of market capitalization, many believe that it has much more potential and an infinite number of use cases. But what is Ethereum? You will learn about this in this simple guide.

What is ether

Any leadership worthwhile must start with a definition. If you look in the dictionary, you will find out that the upper layer of the atmosphere was called ether in ancient Greece, and in chemistry, some classes of chemical compounds were denoted as such. However, this is not about them.

What does ether mean in the world of cryptocurrencies? It is a form of digital money that is primarily used on the Ethereum platform. Ether can be quickly sent to acquaintances via the Internet – usually, it can be done for a much lower fee than other altcoins.

Ether can be compared to cash. Imagine that you sent a friend $ 5 and they immediately came to the account without the participation of third parties. The same would happen if you sent him 1 ETH – unless your friend would be much happier since this coin is now worth over $ 100.

The main purpose of ether is not only digital asset transactions, but also to support the operation of the Ethereum blockchain. It is important to note that this network is at the heart of many decentralized applications, which are referred to by one general term – DApps. These open-source applications offer more efficient alternatives to the tools we use every day based on blockchain. Whenever transactions are made on the network and transactions are closed, a symbolic commission is charged in the cryptocurrency ether.

Who created Ethereum

The second most popular cryptocurrency is the brainchild of a Canadian-Russian programmer named Vitalik Buterin. He learned about cryptocurrencies and blockchain about two years after the launch of Bitcoin. Buterin brought in several other specialists as co-founders of his own currency, and in the summer of 2014, the first ETH token sale took place. As a result, about $ 18 million was raised.

Ether course history

Let’s take a look at how much Ethereum is worth now and how the value of the cryptocurrency has changed since its network went live in July 2015 – about a year after the token sale. When the hype around ETH began to cool off a bit, the coin’s price was mostly $ 1 or so.

In 2016, the first significant increase in the rate began. ETH prices soared in six months from about $ 0.95 (as of January 1) to $ 20.59 (June 16) – an increase of about 2060%. Later, the ETH rate corrected and the coin was trading at around $ 7-8 for the rest of the year. None of the investors suspected that a cryptocurrency boom was just around the corner.

Starting in 2017 and a modest level of $ 8.33, the ether cryptocurrency began its triumphant march. On December 20, 1 ETH was worth $ 868 – 10 320% more than at the beginning of the year. But that was far from the end. After a brief descent to $ 675, ETH nearly doubled its value to a whopping $ 1,432.88 (as of January 13, 2018). It is this course that remains its historical maximum.

After that, the cryptocurrency hype ended, and by December 2018, ETH was already trading below $ 100. However, there were also periods when Ether again traded above $ 200. In June 2019, the altcoin even traded above $ 320. This was largely due to the fact that some large companies, including Microsoft, Amazon, and JPMorgan, began to develop projects on the Ethereum network.

Some analysts believe ether could break the $ 1,000 mark again this year, although the coronavirus panic in global markets could undermine all efforts. Other experts believe that over time, the cryptocurrency Ether may surpass Bitcoin in market capitalization. Considering that BTC currently has a dominant position in the market (64% to be exact), and the market cap of Ethereum is $ 12.7 billion compared to Bitcoin’s $ 95 billion, this prediction seems rather odd.

Where cryptocurrency trading is carried out

You will find Ethereum on all major exchanges as it is the second largest cryptocurrency in the world. As with Bitcoin, Ether is actively trying to gain widespread acceptance among major retailers. Therefore, you can find electronics stores, pet supplies and travel companies that use this payment method.

A special incentive for the Ethereum cryptocurrency may be the fact that fintech companies have started issuing cards that can be replenished with cryptocurrencies and used like regular credit cards. How it works? For example, you load 10 ETH onto your card, and whenever you make a purchase – for example, you buy a new laptop – a portion of the ETH is instantly converted to dollars.

In the coming months, it is worth keeping a close eye on digital assets in light of the coronavirus infection and the collapse of global markets. The coming weeks will show what prospects Ethereum will have, whether it will be able to take market share from Bitcoin and whether new use cases for cryptocurrency will appear. Given that the altcoin network continues to actively develop the Ethereum 2.0 update, which should be completed by 2022, some analysts are optimistic.

Expanded infrastructure can pave the way for more global projects that will burst into the familiar world of finance. It is also hoped that Ethereum 2.0 will solve long-standing problems with transaction processing speed since the blockchain can currently only process 15 transactions per second.