ETHEREUM, the world’s second-largest cryptocurrency by market cap, has been stealing the limelight from bitcoin in recent week.
Here’s everything you need to know about Ethereum.
What is Ethereum?
It’s not fair to consider Ethereum as a direct competitor to Bitcoin.
It has different features and technology.
Ethereum is a decentralised blockchain network which is powered by the Ether token.
A blockchain is where encrypted data can be transferred securely, making it almost impossible to counterfeit or duplicate.
Ethereum enables people to make transactions, earn interest on their holdings through staking, use and store NFTs, trade cryptocurrencies and more.
Some people consider Ethereum to be the next step of the internet.
The internet 2.0.
Who created Ethereum?
Vitalik Buterin and Gavin Wood have received the most credit for founding Ethereum although many programmers and entrepreneurs were instrumental in its creation.
However, no-one controls the Ethereum network as its decentralised, which means that not one person or entity has power over the platform.
In 2013 Vitalik Buterin, a co-founder of Bitcoin Magazine, published a white paper with ways he thought bitcoin could be improved.
He thought bitcoin should allow outside developers to create decentralised applications that could run on the bitcoin platform.
When his idea failed to gain traction, he started building his own platform where he planned more than just trading currency.
In 2014 Ethereum raised money by selling over $18 million worth of tokens called Ether.
In 2015 the developers launched Ethereum.
How does Ethereum work?
The Ethereum network exists on thousands of computers (known as nodes) across the globe, rather than a centralised server.
This makes the network decentralised and not easy to attack meaning it’s unable to go down as a result.
If one computer goes down, it doesn’t really matter because thousands of others are keeping the network up.
Each node has a copy of that computer, meaning that any interactions must be verified so everyone can update their copy.
Network interactions are known as transactions and are stored as blocks on the Ethereum blockchain.
Miners then validate these blocks before adding them to the network.
They will then be registered as transaction history or a digital ledger.
Each block has a unique 64-digit code identifying it.
Miners are rewarded in ETH for their efforts.
And like Bitcoin, all Ethereum transactions are entirely public.
Confirmed blocks can’t be tampered with, meaning there’s a history of all network transactions.
How are miners paid?
Each transaction has a fee, called gas.
This is paid by the user making the transaction.
That fee is paid to the miner who validates the transaction, which is an incentive for future mining and also ensures network security.
Ethereum gas fees can be high due to network activity.
Miners choose transactions with the highest gas fees, which means users have to compete to have their transactions validated which increases costs.
Network congestion is a problem, however, it’s being addressed in Ethereum 2.0.
Ethereum price predictions 2021, 2022, 2023, 2024 and 2025
Forecasting site WalletInvestor predicts Ethereum will reach between $3719.53 and $4297.27 by the end of 2021.
By the end of 2022, they predict ETH will reach between $5624.04 and $6707.31, between $7129.80 and $9459.55 by the end of 2023, $8538.21 and $12349.90 by the end of 2024 and by December 31, 2025, WalletInvestor predicts Ethereum will reach between $9767.54 and $15400.80.
Meanwhile, DigitalCoin predict Ethereum will reach $4610.30 by the end of 2021, $5759.57 by the end of 2022, $6739.63 by the end of 2023, $8300.96 by the end of 2024 and $9965.84 by the end of 2025.
