Provided you understand what cryptocurrency is, and you ‘get’ Bitcoin, then you’re in an excellent place to learn about Ethereum. This Ethereum 101 will take through everything you need to know about Ethereum, with points on Ethereum 2.0 and Ethereum Classic too.
Ethereum 101 Requirements
I’d recommend reading these first; they will give you some base knowledge before you dive into Ethereum 101.
What is Ethereum?
Ethereum is a blockchain network. Except it functions differently than Bitcoin.
Ethereum doubles up as both a payment network and a decentralized super-computer. It might sound crazy at first, but I’ll break it down into byte-sized chunks.
Ethereum uses smart contracts to execute code. Like a computer would. But, instead, the computation power is distributed across many computers(miners) across the world.
The ‘Ethereum Virtual Machine‘ is effectively the ‘computer’. With multiple people interacting with it, processing it and working on it all at once.
The state of the Ethereum Virtual Machine is constantly updated as code is computed. The new ‘state’ of the machine is stored in every block.
Before diving deeper into the technical parts, let’s start by introducing the person who made Ethereum.
Who made Ethereum
Vitalik Buterin. Unlike Satoshi Nakamoto (the founder of Bitcoin), Vitalik is the publicly-known, initial founder of Ethereum.
Though, with this in mind, it’s important to note that there were several contributors to Ethereum, such as Charles Hoskinson (who also founded the Cardano blockchain).
Ethereum’s growth continues to be a community effort, just as Bitcoin’s code is worked on by a community. (This is a common trend throughout the ‘decentralized-blockchain-crypto’ world.)
How much does Ethereum cost
Ethereum Ether has been cheaper than Bitcoin since the start.
You can find the current Ethereum price on TradingView.
Why is Ethereum cheaper than Bitcoin?
There are a few moving parts in the pricing equation: scarcity, demand, and exchange liquidity.
- Scarcity — there is more Ethereum than there is Bitcoin. Ethereum’s supply is ever-increasing, whereas Bitcoin’s supply is capped at 21 million.
- Demand — while demand for Ethereum is high, the need for Ethereum at Bitcoin’s price isn’t there.
Ethereum price history
I’d also recommend TradingView for Ethereum’s price history. Ethereum’s price relative to Bitcoin’s has remained lower since its inception.
How does Ethereum work
As mentioned previously, Ethereum works a little differently from Bitcoin because it functions as a super-computer and a payment network.
Ethereum is blockchain-based, and stores transactions and the state of the ‘super-computer.
Proof of work
Like Bitcoin, Ethereum is also Proof of Work. And requires mining to mint and obtain more Ether.
This will be changing in Ethereum 2.0, as we’ll discuss later.
Ethereum functions as a cryptocurrency at its core. Using Ether (ETH) as it’s native currency and cryptographic hashing algorithms to encrypt and keep the blockchain secure.
Smart contracts set Ethereum apart from the first few blockchain networks, Bitcoin and Litecoin, to name a few.
Smart contracts allow Ethereum to provide computation on the blockchain. They’re stored as transactions are but are computed on the ‘Ethereum Virtual Machine’ — which, like a computer, has an ever-changing ‘state.’
As people and machines use and interact with the stored code smart contracts, the updated state of Ethereum is written to the Ethereum blockchain, providing a verifiable, provable audit log of all computation and transactions. Perfect for decentralized applications.
You’ll learn more about Smart Contracts next.)
How to mine Ethereum
As Ethereum is a proof of work blockchain, like Bitcoin, it can be mined.
You’ll need a different type of miner, however, as the hashing algorithms differ. One of the most popular miners is ETHMiner, which is available for free on Github. It supports OpenCL, CUDA, and Stratum.
The drawbacks and failures of Etheruem have grown extremely apparent. Especially as Ethereum was the first implementer of smart contracts. They’re the chain that set the pathway for all the Blockchain 2.0 spinoffs.
What is Ethereum 2.0
Ethereum 2.0 will usher in a number of changes. It is the second coming on Ethereum. And, it will be far faster, more cost efficient, and potentially spearhead Ethereum’s ascendance through the market-cap valuation of Bitcoin.
Proof of stake
Interestingly, Ethereum is moving towards a proof of stake model. Which, in short means that:
- It’s better for the environment.
- It will be faster and more efficient.
- The fees will be much much lower.
- Ethereum will be ‘mined’ by holding Ethereum (either through running a node, or delegating).
When will Ethreum 2.0 launch
Ethereum 2.0 is already in the process of launching. They’re releasing the new chain in steps.
Currently, the Ethereum 2.0 Beacon chain is up.
You can actually buy ETH 2.0 from Kucoin already. You’ll need some ETH, and then you can convert it to ETH2 through their PoolX platform. You’ll immediately start earning staking rewards.
You might have seen Ethereum Classic listed on your exchange. And it’ll probably baffle you that it’s so cheap!
What is Ethereum Classic
Ethereum ran into a few hiccups early on. Which, lead to a hack and a hard fork. Ethereum Classic is what Ethereum started out as, but continued on. Ethereum as we know it is actually the forked, newer version, now moving towards ETH2.0.
Ethereum vs. Ethereum Classic
Honestly, there isn’t a whole lot of difference between the two at present. They’re still the same blockchain, just, Ethereum Classic is the original unchanged ethereum.
You’ll probably find that Ethereum classic is cheaper to use, because the price and congestion of the coin is far less than that of Ethereum.
Interestingly though, Ethereum Classic is still undergoing regular improvements, and hasn’t stopped growing.
How to store Ethereum Classic
Not all exchanges support Ethereum Classic. I’d suggest the following exchanges if you were looking to store your ETC:
How to mine Ethereum Classic
Mining Ethereum classic is much easier than mining Bitcoin and/or standard Ethereum. But, with that being said — it’s probably wise to join a pool.
Bitfly has put together a brilliant starter guide for people looking to mine Ethereum Classic.
Is Ethereum dead?
Ethereum 101 Summary
Lets finish up with what we’ve learned about Ethereum.
- Ethereum is a blockchain network
- ETH (Ether) is the currency of the Ethereum Network
- Ethereum was made by Vitalik Buterin
- Ethereum runs on smart contracts
- The Ethereum Virtual machine is a massive decentralized virtual computer for running applications on
- Ethereum is moving to ETH2.0 which will be proof of stake.
- Ethereum Classic is the first Ethereum, which had some problems, but still continues to function with upgrades.
- Ethereum is not dead.
Read next; Smart Contracts 101