Ever since the rise of bitcoin we have seen altcoins come and go. Some conquered a place in the Crypto world (like Litecoin or Dash) providing faster transactions; lighter fees; better privacy; alternative consensus methods; and many other features. Some have failed to keep up with the ever-evolving crypto world and faded into oblivion.
Ethereum, however, like none before it, has conquered it’s place as the king of altcoin in a short period of time. So, what is Ethereum? Is it another payment system like bitcoin or is it something more?
“Bitcoin is a calculator; Ethereum is a computer.”
Vitalik Buterin and the Ethereum team created Ethereum with a vision in mind: To facilitate the creation of Dapps (decentralized application) on the blockchain. Unlike most bitcoin clones, Ethereum was built with an it’s own blockchain and with a Turing-complete programming language that enables the creation of projects like DAO (www.daohub.org) and Augur.
The Ethereum network’s value token is Ether. Ether is used to pay for computational services on the Ethereum network and can be sold/bought on exchanges much like bitcoin.
How to buy ether – https://coincheck.com/supports/ethereum
Let’s take a deeper look into Ethereum and see what it has to offer!
Ethereum for miners
Most cryptocurrencies are “created” through a consensus algorithm that ensures that all the information is correctly processed and recorded on the blockchain, to reward miners for their work and their resources a reward is issued for every block that is mined. We call this process mining due to it’s resemblance to Gold and Silver mining, in which the metal’s value is often defined by the difficulty and abundance of said metal – that’s why each bitcoin is worth around 400
Like Bitcoin, Ethereum has a Proof of Work (PoW) consensus algorithm which means that it can be mined with computational resources (CPU and GPU), this allows most people with a computer to mine ether.
Bitcoin mining, however, has become centralized due to it’s high difficulty and lower block reward, meaning that most XBT is mined with ASICs (Application-specific integrated circuits) from large mining operations located in countries with low electricity costs. Ethereum offers true Decentralized mining with a memory intensive algorithm and a stage-by-stage evolution process. The memory intensive algorithm ensures that ASICs for Ethereum are harder to create and the stage -by-stage evolution process will ensure that companies will not have enough time to create an ASIC.
2. Homestead (current)
So, why will this process ensure that no ASICs will be created? Ethereum plans to move to a Proof of Stake (PoS) consensus algorithm in the last stage – Serenity – making any kind of PoW mining obsolete (CPU ; GPU: ) .ASIC). Proof of Stake means that you’ll need to stake the coins you already have to generate more coins reducing the amount of electricity and resources used in PoW mining while still ensuring that anyone with a computer and some ether can still participate in the consensus. Since this change is planned to take place at the end of 2017, there is not enough time/incentive to create an ASIC!
Ethereum for investors
Ethereum raised funds for development through a new kind of Crowdfunding system: ICO or Inicial Coin Offering. Ethereum’s ICO raised $18,439,086 making it the 5th highest funded crowdfunding project (DAO has reached the 1st place). 60,102,216 ETH were distributed through the investors during this I.C.O.
Ether’s value has risen at an incredible pace from the ICO (Initial Coin Offering) price – 0.0005 BTC to 0.02727 BTC (yes, you read right – 5454% increase in less than an year!) Due to it’s experimental nature, fast success and other factors, Ether’s price is extremely volatile, which makes it a favorite for traders. Merchants will have to wait a bit to implement Ether as a form of payment due to this same factor: volatility.
Advantages of Using Ethereum instead of Bitcoin:
– Faster transactions
– Lower fees
– More features (Token creation; Smart Contracts; etc.)
Advantages of Using Bitcoin instead of Ethereum:
– Lower volatility
– Widely accepted payment system (worldwide)
– Established (Bitcoin has been around since 2009)
In light of the amazing success of Ethereum, many exchanges have decided to add it to the fiat list. Coinbase is the latest and the most noticeable on the list with it’s co-founder, Fred Ehrsam, going as far as to say that Ethereum can “blow past bitcoin entirely” and establish itself as the new King of Crypto even though Ethereum was not created with the intention of being a direct competitor to Bitcoin, It’s sure giving it a run for it’s money!
So what are you waiting for? Login to your Coincheck account and catch the “Ether Fever”!
By António Madeira