What is Ethereum (ETH)? How to buy or stake it?
Curious about Ethereum? You should be! Its native currency, Ether, is traded as a digital currency on exchanges (just like other cryptocurrencies), but it is also used to run unique applications on the Ethereum network. And that Ethereum network - that’s something special.
You’ve probably heard stories of people who couldn’t get a loan because of a bad credit report. Or people who weren’t able to get their new home insured after losing all they had in a natural disaster. A horrible situation to be in and, at times, one that seems impossible to get out of.
Well, Ethereum tries to be part of the solution. This decentralized software platform can run without downtime, fraud or control, or interference from third parties. This way, everyone in the world can have free access to a decentralized suite of financial products. No matter what one’s background, credit status, nationality, ethnicity, or faith is.
And that makes the Ethereum network for some countries incredibly interesting — and important. It’s a way to get access to bank accounts, insurance, loans, and much more without having to depend on the state or its institutions. But, it’s also used by entrepreneurs to launch their cryptocurrencies. As Ethereum would say, it can be used to “codify, decentralize, secure and trade just about anything.”
Founded by many programmers and entrepreneurs, with Vitalik Buterin and Gavin Wood being vital players in this process, Ethereum officially launched in 2015. Ether (Ethereum’s native currency) is now the second-largest (!) digital currency after Bitcoin.
A unique, multi-purpose software platform that opens a world of possibilities for people all over the world.
What is Ethereum?
Ethereum is a decentralized, public blockchain-based platform. Using the Solidity programming language, it runs smart contracts: applications that run exactly as programmed without the risk of fraud or third-party interference.
The advantage of Ethereum over Bitcoin, or other public blockchains, is that it allows for Turing complete smart contracts, which means that any program can be run on the Ethereum blockchain.
This flexibility has led to the development of a wide range of Ethereum-based applications, from decentralized exchanges to prediction markets.
How Did Ethereum Come About?
Ethereum was first proposed in 2013 by Vitalik Buterin, a then 19-year-old Russian-Canadian programmer. Buterin had been involved in the Bitcoin community since 2011 and was frustrated by the limitations of the Bitcoin blockchain.
He proposed Ethereum as a way to build upon the strengths of Bitcoin and create a more general-purpose blockchain platform.
The Ethereum blockchain went live on July 30, 2015, with 72 million ETH pre-mined. The Ethereum Foundation, the non-profit responsible for the development of Ethereum, raised $18 million in a crowd sale to fund the project.
Ethereum has since become one of the largest and most popular blockchain platforms in the world, with a market capitalization of over $24 billion. The platform is supported by a large and active community of developers and businesses building applications on Ethereum.
Important Facts About Ethereum
Before getting started on Ethereum, there are a few things you need to know.
- First, Ethereum is not just a cryptocurrency; it's a decentralized platform that runs smart contracts. If you're interested in using Ethereum for its cryptocurrency value, you can buy and trade ETH like you would any other cryptocurrency. However, if you're interested in building decentralized applications on Ethereum, then you'll need to use the platform's native programming language, Solidity.
- Second, Ethereum has two different blockchains: a public mainnet and a testnet. The mainnet is the live Ethereum blockchain on which all transactions and smart contracts are executed. The testnet is a copy of the mainnet that allows developers to experiment with their smart contracts without having to worry about losing real ETH.
- Third, Ethereum has finally completed the Merge. This was crucial for their transition from Proof of Work to the Proof of Stake validation method. This huge crypto event was long in the making, even before Ethereum was launched. This will have a huge environmental impact - as The Merge promises a 99,95% reduction of energy consumption by the Ethereum network.
Recommended: What investors should know about Ethereum finally completing The Merge
Tips for buying Ethereum
If you're interested in buying Ethereum, there are a few different ways you can do it.
1. Crypto Exchange
The easiest way is to use a cryptocurrency exchange. A crypto exchange is a platform that allows you to buy and sell cryptocurrency. Here, you buy a cryptocurrency with fiat currency, and trade a cryptocurrency with another cryptocurrency, like Bitcoin for Ethereum.
However, trading using an exchange means you will have to study the movement of the market. The cryptocurrency market is notoriously volatile, and it can be overwhelming (and possibly devastating) for new traders.
Thankfully, traders have access to plenty of resources. Helpful tools like BOTS.io provide you with a better understanding of how the market works and how to navigate exchanges properly.
2. Peer-to-Peer Platforms
If you don't want to use an exchange, you can also buy ETH directly from someone else using a peer-to-peer platform.
Compared to an exchange, a peer-to-peer platform functions more like an online marketplace where buyers and sellers can find each other and trade directly. You can also buy ETH with fiat currencies or other cryptocurrencies on this platform.
If you want to earn Ethereum rather than buy it, you can participate in Ethereum mining. Ethereum mining is the process of verifying transactions on the Ethereum blockchain and earning rewards in ETH.
To start mining, you'll need to download Ethereum's official mining software, get an ETH wallet to store your rewards, and join a mining pool. Then you can start miners that will do the work for you and earn ETH rewards.
How to Stake Ethereum
Ethereum staking is the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. By doing so, users can earn rewards in the form of newly minted ETH or transaction fees. The amount of ETH you can earn from staking will depend on how much you stake and how long you keep your funds staked.
If you're interested in earning rewards from staking, you'll need to choose a staking provider. There are many different providers to choose from, so be sure to do your research before selecting one. Once you've chosen a provider, you'll need to deposit your ETH into a wallet that supports staking.
Once you have your ETH in a staking-compatible wallet, you're ready to start earning rewards! The number of rewards you earn will depend on how much ETH you stake and how long you keep your funds staked. So, if you're looking to maximize your rewards, be sure to stake a large amount of ETH for a longer period of time.
Is Ethereum a Good Investment?
There are several factors to consider when deciding if Ethereum is a good investment.
- Understand how it works. Ethereum is a decentralized platform that runs smart contracts, which are applications that run exactly as programmed without any risk of fraud or interference by third parties.
- Consider the price. The price of ETH has fluctuated a lot in recent years, but it has generally trended upwards. This means that if you're looking to invest in Ethereum, you could potentially see some nice returns on your investment.
- Know the risks. As with any investment, there's always a risk of losing money. However, if you're careful and do your research, you can minimize the risks and potentially make some nice profits from investing in Ethereum.
Overall, Ethereum would never gain this kind of popularity and confidence amongst investors if it weren't sought as a valuable investment. It has all the potential to grow even further in value, making it a wise choice for those looking to invest in cryptocurrency.
What is the Ethereum Merge?
The Ethereum network recently (15th September 2022) completed the Merge. With this move, the network has shifted from Proof of Work (PoW) to Proof of Stake (PoS). This makes the Ethereum network more scalable and energy efficient while also enhancing security and privacy for the network’s users.
Previously, the network could handle about 25 to 30 transactions per second. With the Merge, the network had aimed to increase this to thousands of transactions per second while reducing gas fees. Another goal of Ethereum 2.0 is to eventually phase out mining entirely. Theoretically, with PoS, miners will become unnecessary since people who stake their ETH will be rewarded instead.
What Ethereum's Merge means for BOTS Users
TL;DR: BOTS users are not required to take any action in relation to the Ethereum Merge.
After reading about The Merge, like any other investor, you too must be wondering about the impact this has on you. Well, we have some good news on that end. The Ethereum chain for the end user has remained the same. All that has changed is how the blocks are being verified i.e. the move from Proof of Work to the Proof of Stake validation method. Everything else remains consistent with the original protocol. The price of eth has been under pressure since The Merge, but as we have seen in the past, this is a common occurrence whenever any such reforms occur.
Final Thoughts on Ethereum
From trading to mining, to staking, there are many ways to start earning with Ethereum. Do your research and find the best method that suits you. Once you've found a way to earn ETH, be sure to monitor your investments carefully to ensure that you're making the most out of your earnings.
Also, don't forget to have fun while you're earning! After all, cryptocurrencies are still a new and exciting field. So enjoy the ride and happy earnings!
This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing. Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.