Ethereum cryptocurrency: how does it work and how to buy it?
Learn more about the Ethereum cryptocurrency!
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Ethereum cryptocurrency appears second on the list of digital currencies with the highest market value.
Known as a platform that uses Blockchain technology, Ethereum is second only to Bitcoin.
But after all, what makes this cryptocurrency different? Are all digital currencies the same?
That’s what you’re going to find out now. Keep reading to learn more about the subject!
What is Ethereum cryptocurrency and how does it work?
In practice, Ethereum is a platform based on Blockchain technology – the same as Bitcoin.
This high-quality digital system is used to send and receive information that is stored in block form.
Within Ethereum, investors conduct transactions and execute smart contracts.
Ether (ETH) is its native currency. For this reason, it is common to use the term Ethereum when talking about the cryptocurrency.
How did Ethereum and Ether come about?
Ethereum was created by Russian Vitalik Buterin.
He discovered Bitcoin in 2011. After a while, he became more interested in this type of technology.
In 2012, he co-founded Bitcoin Magazine – a website specializing in BTC coverage.
Back in 2013, he met with professionals in the field and realized that the Bitcoin Blockchain network could also be used to decentralize other segments.
In November of the same year, Vitalik Buterin published the project's initial White Paper.
However, it was only in 2015 that blockchain really came to life.
The Ethereum network executes programs automatically.
After all, its objective is precisely to be a platform capable of automatically executing applications without a central coordinator.
There is no limit on the issuance of Ether coins (unlike Bitcoin). Furthermore, its monetary policy has been changed many times.
How to buy Ethereum?
There are several exchanges that offer the purchase of ETH with BTC or dollars.
The main ones are:
• Binance
• Bitprice
• Poloniex
The safest method to acquire Ether in Brazil is to buy BTC on popular exchanges and then exchange it for ETH at exchange houses.
It is also possible to invest in Ethereum through cryptocurrency funds, ETFs or Peer-to-Peer (P2P):
• Cryptocurrency funds: are products that bring together financial resources from several investors to invest in certain crypto assets.
• ETFs: Cryptocurrency ETFs can be traded on the stock exchange.
• P2P: You can also purchase the currency directly from sellers on platforms like LocalBitcoins and Paxful.
How to mine Ethereum?
Cryptocurrency mining is the name given to the process of validating and including new transactions in the blockchain.
Miners are the ones who carry out this activity, using the correct equipment.
As a reward for the work, the miners receive cryptocurrencies.
To participate in the process, professionals must purchase PCs with more powerful video cards.
The greater the computing power of the machine, the greater the chances of validating transactions and earning cryptocurrencies.
But since there are so many people mining Ether, it is common for users to join a mining pool, where several people come together to use everyone's processing capacity and validate a block.
What are the main differences between Ethereum and Bitcoin?
Bitcoin and Ethereum are considered the two largest cryptocurrencies.
However, when it comes to technology, there are some differences that make its use completely different.
In fact, both use blockchain and operate in a decentralized manner (without the control of a government or Central Bank). However, the similarities end there.
To help you better understand the subject, we will explain how Bitcoin works and then the main differences between the two crypto assets:
How does Bitcoin work?
Bitcoin, created in 2009, is the best-known cryptocurrency in the world.
It was created to allow payment for goods or services without the possibility of censorship.
For almost a decade, this digital currency has been operating without interruption, in addition to offering several properties for use.
Bitcoin (BTC) uses a simple version of the blockchain distributed database, which stores as little information as possible.
To buy Bitcoins, you need to transfer money to a brokerage located in the Blockchain environment, whether in Brazil or not.
The price of Bitcoin, like any other cryptocurrency, is volatile.
Its Blockchain technology is unique because it does not store each user's balances. What is actually stored are the financial transactions of each address.
This means that when a cryptocurrency user decides to check their balance, the system searches for the entire record in the information history.
And now that you know how each cryptocurrency works, it's time to understand the main differences between each one:
Objectives
The goals are the main differences between cryptocurrencies.
Bitcoin was designed to be a fully decentralized currency.
Ethereum, on the other hand, was created to be a platform for smart contracts and decentralized application programming, in addition to also having its own cryptocurrency.
However, Ethereum is also considered a decentralized system.
Emission
According to the Bitcoin protocol, only 21 million units of BTC can be mined.
At the moment, 90% of all Bitcoins have been mined.
However, until this limit is reached, new coins are created through mining.
But it is important to mention that mining the remaining part of Bitcoin will not be done so quickly.
The remaining 10% of Bitcoin (2.1 million units) will be generated by 2140, that is, 118 years from now.
Ethereum, on the other hand, has no issuance limit.
Speed
At this point, Ethereum has a big advantage, as it is considered faster than Bitcoin.
It's just that they work with different blocks in the Blockchain network.
While in Bitcoin there is a block every 10 minutes, in the Ethereum network, the deadline is 13 seconds.
Conclusion
Now you know what Ethereum cryptocurrency is, how to buy it, invest in it and what the main differences are between Bitcoin and Ethereum!
However, to make good decisions, you need to know the main risks involved and know what your investor profile is!
