Staff Reporter
Bitcoin has been dominating the news as of late and understandably so. With its fluctuating price and unwavering popularity as a talking point, Bitcoin remains the hot topic of the cryptocurrency world – but what about the alternatives? What about the up and coming cryptocurrencies that could be dominating the market in the near future? One such cryptocurrency is Ethereum and here, we’re going to take a look at exactly what Ethereum is in our beginner’s guide.
What Is Ethereum?
While Bitcoin is a cryptocurrency in and of itself, Ethereum is actually a decentralised platform designed for running and hosting smart contracts. The coins within Ethereum – or the ‘cryptocurrency’ of these platforms – are called Ether (ETH) and these coins are designed to be used to make payments through the Ethereum platform for hosting and accessing different applications within its blockchain. The ETH price, or in other words the worth of Ethereum compared to fiat currencies, currently sits at $502.75 at the time of writing, but this is likely to fluctuate and change with every transaction that is made.
The Terms You Need To Know
If we’ve already lost you, it could be due to a few of the terms we’ve been using – especially if you don’t have any knowledge of cryptocurrencies as a whole. To help you out, we’ve pulled together a few of those terms to give you a quick definition:
- Blockchain
Blockchain is the very technology that pretty much every cryptocurrency will operate from and is exactly what makes a cryptocurrency decentralised. A blockchain is essentially a digital ledger that contains data records – usually transactions – that are encrypted and stored in ‘blocks’. This ledger is distributed across thousands, if not millions of host computers across the world, making it pretty much impossible to tamper with.
- Wallet
A wallet for Ethereum is essentially the same as a wallet for your normal fiat currencies (your pounds, dollars etc) in that it acts as a storage for your currency. However, cryptocurrency wallets act more as a gateway for transactions or for the writing and deployment of smart contracts. Private and public keys are needed to make transactions to and from a cryptocurrency wallet, making it practically impossible to hack or to commit fraud.
- Smart Contracts
Smart contracts aren’t quite like the contracts we may be thinking of – in fact, they’re entirely digital computer protocol that will automatically execute the contract. Of course, this depends on both sides of the contract. Once one side has been completed, a smart contract will fill in the other side automatically. This system provides the safest method of contract due to it’s incorruptible system and the lack of risk of fraud or delayed payments.
What Is Ethereum Capable Of?
Ethereum opens up a world of different options for users, whether it’s the creation of more secure contracts, or the crafting of their own cryptocurrencies. Ethereum offers the opportunity for safe, fast and secure funding for projects, and there is even talk of a project being developed to connect banks in a transparent, but extremely secure B2B platform.
Ethereum is proving to be a valuable addition to the cryptocurrency world, offering new ways of using digital coins and the blockchain to improve transactions and offer smart contracts between businesses or between businesses and consumers. Where Ethereum could go in the future has yet to be seen, but the potential is certainly isn’t something to be overlooked.
