Ethereum 101

Ethereum coin: A non-technical brief on uses, acquiring, and storage

The Ethereum blockchain offers a robust platform for building decentralized applications commonly referred to as Dapps. The developers seeking to use the platform to create these applications need to cater for the cost. How? By using the platform’s native token, Ethereum coin.

Apart from developers, the Ethereum coin can be acquired and traded on cryptocurrency exchanges making profits along the way.

In this post, we shall concentrate on the Ethereum coin rather than its platform.

Two uses of the Ethereum coin

Fuel

As we have mentioned earlier, activities on the Ethereum blockchain are not for free, whether it’s interacting with decentralized apps or sending some Ethereum coins over to a friend or paying for goods and services. The Ethereum coin is needed to fuel these activities.

Ethereum coin

However, how much ‘fuel’ these activities need for them to run to completion depends on a number of factors.

For example, as a car needs more fuel for traveling a longer distance, fuel on the Ethereum blockchain is calculated depending on how long a single interaction on the platform will run which also translates to how much computational power is needed.

Investment

The Ethereum coin can also be used as an investment. However, with the kind of volatility that is witnessed in the cryptocurrency space, this option can be scorned at by some. But, seasoned cryptocurrency traders will argue that the Ethereum coin is among the best cryptocurrencies to include in your portfolio.

Ethereum coin

This is largely so because the Ethereum coin is the second largest cryptocurrency in terms of market capitalization. Note that market capitalization is calculated by multiplying the number of coins in circulation with the value of a single Ethereum coin at a particular moment.

As an investment, a cryptocurrency trader may choose to buy the coin when the price is low or at the current price, keep it and sell when the price appreciates.

With cryptocurrencies, the prices can appreciate or depreciate within minutes. Therefore, when looking to use the Ethereum coin as an investment, it is advisable to keep tabs on the major factors that may cause crypto to skyrocket or plummet. Understanding these dynamics plus a knowledge of the price charts can make the difference between a good return on investment and a loss.

3 Ways of acquiring the Ethereum coin

Purchasing

This is by far the most common way of getting your hands on the coin. Purchasing the coin can be done on virtually every reputable cryptocurrency exchange worldwide. However, with this option, the exchanges may have some hindrances.

For example, some exchanges may not allow you to directly use fiat to purchase the Ethereum coin. In such a case, the Ethereum coin can only be bought by using another crypto like Bitcoin.

In case the exchange that supports fiat is not your favorite, you can purchase the coin and transfer it to your preferred exchange and purchase the Ethereum coin from there.

Mining

The next best way to acquire the Ethereum coin is by confirming transactions on the Ethereum blockchain. This process, as known in the cryptocurrency circles, is called mining. Since the Ethereum blockchain uses the Proof of Work consensus algorithm, powerful computing devices are needed to discover transactions on the blockchain. The more computing power you have, the more likely it is to find new blocks, confirm them by solving complex mathematical equations and finally being rewarded with Ethereum coins.

Ethereum coin

However, Ethereum developers are working on shifting from a Proof of Work algorithm to an algorithm that does not require high computing power to confirm transactions.

Mining the the coin can be done individually or as a team by joining a mining pool. While joining a mining pool may look viable, the rewards are shared among those who contribute their computing power into finding a new block.

However, if you decide to mine as an individual the returns may not be guaranteed since having enough computing power to guarantee consistent returns can be tricky and expensive.

Accepting as a mode of payment

If you are a merchant, you may have an extra way to acquire the Ethereum coin. i.e expanding your payment options to include Ethereum coin.

Storage

The Ethereum coin, as with other cryptocurrencies, is stored in crypto wallets. One advantage with the coin is that it is supported by a wide range of software and hardware wallets.

Ethereum coin

Some of the leading software wallets include Jaxx, Mist, and Atomic. For the hardware wallets, the Ledger Nano S, Ledger Nano X, and Trezor are the top choices.

Conclusion

As we conclude, it is good to note that the Ethereum coin and Bitcoin differ on some grounds. For example, Bitcoin was developed as a peer to peer payment system. While Ethereum, although it has this characteristic it offers a platform to develop decentralized applications.

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Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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