Learn more about Ethereum

History

The concept of Ethereum as a digital asset was introduced to the public in 2013 by programmer Vitalik Buterin. He was born in Russia but his parents emigrated to Canada when he was a kid. He delved deep into Bitcoin for a few years because he was keen to design a more advanced platform to run decentralized projects. The name for a new token was picked deliberately. The term Ether implied a transparent network that would span the globe. Buterin teamed up with other developers and a year later presented the blueprint for Ethereum’s script. Shortly after, in 2015, his team rolled out the project officially and Ethereum’s first sequence of blocks was mined. Initially, Vitalik Buterin raised money for his project through crowdfunding. Later on, his invention sparked interest among many financial institutions and large corporations. Ethereum turned out to be a roaring success. Its founder who owned a part of ETH tokens notched the status of a crypto billionaire. Nowadays, Ether and Ethereum are frequently used as synonyms, though they are not the same concepts. Ethereum is a blockchain-based software platform, but Ether is its native token. To put it simply, Ether is a cryptocurrency that exists in the Ethereum network powered by blockchain technology.

Ethereum versus Bitcoin

At the time of creating this material, Ethereum is ranked number two among cryptocurrencies in terms of market cap. Bitcoin is firmly recognized as the top crypto: $741.6 billion and $310.9 billion respectively. Both cryptocurrencies are the most valuable tokens. BTC is now trading at around $39,000 per token. ETH is trading at nearly $2,600. Both digital assets are main rivals for obvious reasons. They have common features and differ at the same time. The first similarity is blockchain technology. The second one is high volatility. Besides, they both are designed to be decentralized. As for their functions, Ethereum offers much wider opportunities. Ethereum is acknowledged to be a digital currency, a payment system, and an investment asset. Ethereum’s unique feature is that it supports smart contracts, an essential tool behind decentralized applications of the platform. Transactions are verified automatically. Interestingly, both Ether and another token can be used as a payment means. As a result, the Ethereum concept gives birth to a great number of start-ups and ICOs. No wonder, this cryptocurrency excites interest from entrepreneurs and IT firms. The Ethereum platform is employed to create and run some investment funds, web portals of video game monetization, and platforms for cultural and art projects. The Bitcoin platform also includes smart contracts, but their creation is a more time-consuming activity. Ethereum mining is 11 times less energy-consuming than Bitcoin mining. Therefore, the first project is more environmentally friendly. Whereas Bitcoin emission is limited to 21 million tokens, Ether tokens can be mined without any limitations. Last but not least, the average speed of creating a block on the Ethereum platform is 15 seconds, but it takes 9 minutes to create a block on the Bitcoin platform. In both cases, miners are paid a reward in tokens. At present, the reward in the Bitcoin network is 6.25 BTC whereas it is 2 ETH on the Ethereum platform. Moreover, Bitcoin halving takes place once every 4 years like clockwork. In contrast, Ethereum halving does not happen sharp on schedule.

USD/ETH chart

We have already mentioned that Eеthereum was launched in 2015. At that moment, it was trading at $2.8. After that, the quote changed often and considerably. Thus, just a day after its launch, the token depreciated by four times. This was explained by the fact that investors who were the first to put their money in the new token started to sell it off. The all-time low was recorded in the middle of October 2015, when the price slumped to $0.4. As time passed, demand and supply achieved balance. In 2016, the quote climbed above $10 for the first time in history. Experts suppose that the rise was driven by a switch to the Homestead protocol and adding ETH to the popular Ledger Nano S hardware wallet. In 2017, the interest in ETH was boosted by social trading platforms. Just after the token appeared on widely-known exchanges, it became very popular. What is more, BTC was actively gaining in value at that time. It supported ETH as it correlates with other cryptocurrencies. As a result, by the end of the year, ETH cost as much as $800. During the period of 2018-2020, the quote was hovering between $108 and $1,410. The token closed 2020 at the level of $635.

In other words, from 2015 to 2020, the asset price increased by 227 times. Thus, the $100 investment brought a profit of $22,700.

Yearly dynamic

Judging by the chart, Ethereum is highly volatile. In the article “ETH price in the last 12 months”, you will learn how the price was changing during the previous year. In 2021, the token gained in value and set a new all-time high of $4,900. This happened amid a rise in the whole cryptocurrency market. Then, digital assets were in great demand and ETH was not an exception. Opening the year at the level of $970, the altcoin exceeded $3,960 in May. Then, the price dropped to $1,900 and approached $5,000 in the autumn. In early 2022, one coin cost about $3,800. By the middle of March, the price slid to $2,600.

As a result, in the last 12 months, from March 2021 to March 2022, Ethereum gained 48%. Meanwhile, Bitcoin depreciated by 35% in the same period. In the recent year, Ethereum increased in terms of market capitalization. The value of the currency in circulation jumped to $310.8 billion from $211.5 billion. At present, the Ethereum market share stands at 18%, while a year ago, it totaled about 12%. For the same period, the BTC dominance dropped to 43% from 63%.

Where to buy

Once you decide to invest in a particular asset, you should primarily focus on its price. To learn more about the price of Ethereum, read the article “How much ETH costs”. Nowadays, ETH is traded at many exchanges, including IFXBIT, Binance, Kraken, Coinbase, etc. It is also possible to purchase altcoins by means of virtual exchangers. Traders can choose the most appropriate one by means of the BestChange service. Traders may also buy ETH via p2p services and from other traders. Notably, the letter variant may pose a lot of risks. Whatever means of buying the asset you choose, you need a wallet to store coins. If you prefer crypto exchanges, you will get the storage automatically. In other cases, you should find it by yourself. There are numerous types of wallets in the market. If you prefer smartphones, it is better to focus on mobile variants. If you use computers, you may choose desktop versions.

Apart from that, there are also hardware and paper wallets.

Popular ETH wallets:

MyEtherWallet
Trezor;
Ledger Nano S;
Trust;
Mist.

Mining

If you want to get Ethereum, you may mine it. To learn about the peculiarities of ETH mining, read the article “ETH difficulty chart”. To get ETH, miners also use the power of their equipment, for example, computers and laptops, to mine new blocks on the network. In this case, the difficulty is that requirements for miners are set by the network. The reward is Ethereum coins. When there are a lot of users who want to get coins, the difficulty increases and it needs more force to mine a block. When the number of miners drops, it becomes easier to get coins. The difficulty is needed to make the mining process profitable. It becomes possible when the price of coins exceeds the expenses of electricity and equipment. What is more, the difficulty provides the necessary pace of issuing new coins and maintains the required transaction speed. The difficulty is measured in Hashes or TeraHashes. The ETH difficulty indicator is constantly changing. It happens once in 14 days. The adjustment is carried out automatically based on the data on the number of mined blocks and hashrate, that is, the total capacity in a specific time period. At the time of writing, the ETH mining difficulty was 12.7 P, that is 12,700 TH. For comparison, for some time after the launch, this indicator was 6-8 TH.

ETH Classic chart

We should explain that Ethereum Classic is not an equivalent to Ethereum, which we described above. There are some reasons for that. In 2016, the Ethereum network suffered a hacker attack, allowing criminals to steal more than 3.5 million tokens. To save the situation, developers resorted to drastic measures. As a result, the blockchain branched into Ethereum (ETH) and Ethereum Classic (ETC), which is the original version. What is the difference between them? Let us focus on figures. These cryptocurrencies have different tickers and prices. At the moment of writing the article, ETH was trading at $2,590, whereas ETC cost $25.87. Thus, ETC is 100 times cheaper than ETH. Judging by the dynamic of Ethereum Classic since 2016, its price movement resembles the one of Ethereum. ETC reached its highest level in May 2021 like ETH. Then, the token price exceeded $130. Ethereum Classic slumped to its all-time low of $0.6 in July 2016.

In addition, the assets have different market capitalization. ETC market cap totals 3.4 billion, whereas the one of ETH is 90 times more. Therefore, they have different positions in the rating. ETH ranks 2, while ECT is 35th. Finally, they differ in trading volume. The 24-hour ETH volume is $10 billion, while the trading volume of Ethereum Classic is about $216 million.

Outlook

What future may ETH face? To learn about the future of the cryptocurrency in the short and long terms, read the article “Outlook for ETH”. There are a lot of factors that affect the altcoin’s price. The dynamic recorded in 2017 proves this fact. The overall situation in the cryptocurrency market and the formation of new startups and projects in the Ethereum chain have the biggest influence on the asset. When mass media sources issue news about such events, Ethereum becomes very attractive to investors, which boosts its price. What is more, Bitcoin also affects altcoins. As a rule, altcoins fall and rise together with Bitcoin. Geopolitical factors and monetary policies in large states also affect altcoins. Thus, in 2022, the quotes were influenced by the situation in Ukraine and the US monetary policy tightening. ETH technology development is one more factor that shapes the asset price. Analysts are sure that upgrades are a key driver of the cryptocurrency’s growth. At the moment, many DeFi and NFT projects are built on the Ethereum blockchain network. In 2022, the creators of ETH promised the final transition to version 2.0. The new algorithm is aimed at increasing the network security and environmental friendliness of ETH mining. According to forecasts, this year, the value of ETH may reach at least $7,000 in the absence of force majeure. More optimistic predictions suggest growth above $10,000.

Conclusion

As we can see, ETH has upside potential, which attracts new followers and makes Ethereum more popular. Despite skepticism, it has proven to be a reliable profit-making asset, which is constantly being developed and improved. Ethereum’s features make it a good choice for both long-term investments and short-term trades. Do you want to join the ETH community? Invest in the altcoin at the IFXBIT exchange.