What is Ethereum? [The most detailed explanation of ETH virtual currency]

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Surely you or anyone who sees this post already knows about Bitcoin? Ethereum (ETH) was once considered the electronic currency that replaced Bitcoin.

So is Ethereum special that can be compared to BTC? Why is it the second-largest cryptocurrency on CoinMarketCap after Bitcoin?

What is it different from Bitcoin? Should I invest in this property or not? ...

In this article, Blogtienao will bring you all the information about Ethereum.

Let's see the article offline!

Watch now: What is Bitcoin? if you don't know

overview

First nameEthereum
SymbolETH
AuthorVitalik Buterin, Gavin Wood
Date of birth30/07/2015
Maximum total supplyNot available
Official domain namehttps://ethereum.org/
Language developmentC ++, Go, Python
Source codehttps://github.com/ethereum
White Paperhttps://github.com/ethereum/wiki/wiki/white-paper

What is Ethereum (ETH)?

Ethereum is a block chain distributed computing platform that runs on Blockchain technology, through functional use smart contract (Smart Contract).

Ethereum can perform peer-to-peer transactions and contracts through a cryptocurrency unit of Ether (ETH).

Not only that, they are also considered a useful application platform and create their own distributed financial ecosystem.

Ethereum was introduced in late 2013 by Vitalik Buterin, with the desire to create a coin to overcome the bad points of Bitcoin.

And with the "mission" on, the capitalization of ETH has reached 25 million in the first sale.

According to the initial development roadmap, Ethereum will go through four important stages, including:

  1. Frontier
  2. Homestead
  3. Metropolis
  4. Serenity

As of December 12, Ethereum has completed 2019 phases and is about to enter the fourth phase.

However, there was an important change during this fourth period when it was renamed Ethereum 2.0.

What is Ethereum 2.0?

Ethereum 2.0 also known as Serentity. This is a common name for some major Ethereum updates.

This update will address Blockchain's impossible trilogy: security, network scalability, and decentralization.

The main way to solve these 3 problems:

  • Beacon Chain
  • Proof of Stake (PoS)
  • Sharding
  • ewas
Ethereum 2.0 Chain structure
Ethereum 2.0 Chain structure

Beacon Chain

Beacon chain is the core of Ethereum 2.0. This chain will run in parallel and cross link between Main chain and Shard Chain.

Proof of Stake (PoS)

PoS is a consensus mechanism that will replace the current PoW mechanism (Proof of Work). The conversion will adopt a hybrid consensus mechanism between PoS and PoW - Casper Friendly Finality Gadget (FFG).

You can understand that Ethereum's value and system will no longer depend on mines and miners.

So the system will be more and more powerful and no longer influenced or dominated by miners.

Usually, an Ethereum transaction requires a miner to confirm, otherwise the transaction will be unsuccessful.

Watch now: What is proof of stake?

Proof of Stake

Sharding

Sharding is a method scaling throughput on the chain. The method is implemented by splitting large databases into small databases.

These small data are called 'shards'.

ewas

Ethereum-flavored WebAssembly (eWASM) is a limited subset of WebAssembly (Wasm) used for futures.

Each shard will include 1 eWASM equivalent to the Ethereum Virtual Machine.

At the moment, there is no developer consensus for replacing EVM. But the developer will have a plan.

How many stages are there to complete ETH 2.0?

To complete ETH 2.0, we need to go through 3 phases, including:

  • Stage XNXX
  • Stage XNXX
  • Stage XNXX

Stage XNXX

The first phase is the launch of Beacon Chain will deploy PoS on Chain. In this phase will also launch a type of property on the Beacon chain.

This type of property is called Beacon ether (BETH). BETH is considered an authentic reward to pay to Staking people.

In addition, you can also own BETH by using ETH to buy. Each ETH will equal 1 Beacon ether.

This stage does not yet support sharding, smart contracts and property transfers. So you will not be able to withdraw BETH until sharding can be executed in phase 2.

Stage XNXX

The next phase will shift focus to Shard Chain. Sharding will break down state information into 'shards' to achieve scalability and network speed improvement.

Stage XNXX

Phase 2 is considered the final stage of Serenity when it is completed The base class upgrade and this period is set to take place around 2021.

During this phase, the shard chain will transition to a chain state that supports smart contracts and asset transfers.

At what stage are we at ETH 2.0?

According to Vitalik's share at the 2049 Token Conference held in March 3, we have not yet entered any phase of ETH 2019 (as of December 2.0).

During this time, the Ethereum development team is finalizing the specifications. Then came the testnet launch and let some big companies test the POS system.

However, according to Vitalik, the above stages can work in tandem without the need to be in order.

Competitors of the project

Ethereum was once considered Bitcoin 2.0 but success was limited to the smart contract platform.

Although it still leads in smart contract platforms in terms of market capitalization, the influence is not much.

But projects compete with projects created to improve platform limitations. Some names can be mentioned as:

Nearly 60% of dapps run on the Ethereum network, 17% on EOS, 17% on Tron - according to DappRada. But the top 10 new dapps released on January 6, 1, Ethereum accounted for 2020% and Tron 40%.

Competitor of ETH

How does Ethereum work?

The Ethereum blockchain is basically a transaction-based state recorder. In computer science, a state machine refers to something that will read a series of inputs and, based on those inputs, will move into a new state.

The state of Ethereum has millions of transactions. These transactions are grouped into blocks. A block contains a series of transactions and each block is connected to the previous one.

To make a transition from one state to the next, the transaction must be valid. For a transaction to be considered valid, it must go through a validation process called mining. Mining is when a group of nodes (i.e. computers) use their computational resources to create a block of valid transactions.

The process of validating each block by having an miner provide mathematical evidence is called proof of work.

A miner confirms a new block is rewarded with a certain amount of value for doing this job. That value is: The Ethereum blockchain uses an intrinsic digital token called Ether. Every time an miner proves a block, a new Ether token is created and awarded.

Client and node

The Ethereum network is made up of many nodes, each running compatible client software. There are two clients used by the majority of nodes: Geth (written in the Go language) and Parity (written in the Rust language).

Application built on Etherreum

There are many different types of applications that can be built on Ethereum. I will list for you the highlights:

  • Decentralized finance (Defi)
  • Decentralized exchange (DEX)
  • Decentralized applications (Dapps)
  • ...

Let me evaluate each application offline:

Decentralized finance (Defi) and Ethereum

Summary

In the current system, all financial services are controlled by an intermediary. Whether it is transferring money, buying property or lending, you must go through a rental intermediary to broker financial transactions.

On the other hand, financial services are based on Ethereum, connecting peers and allowing them to access assets more easily and affordably.

Decentralized financial application on Ethereum

Ethereum is currently the platform with the most active defi applications. This section is probably also the most used brothers application, so I'll list it first:

  • Stablecoin: Put simply these are cryptocurrencies designed to minimize the impact of price volatility. Cryptocurrencies backed by fiat (fiat) are the most popular and the first stablecoin on the market.
  • Coinbase Wallet: Multi-currency wallets, Coinbase Wallet also provides access to Web-level Applications (dApps) provided by Ethereum smart contracts.
  • Huobi Wallet: Multi-currency wallets, dApps and staking as a service for PoS networks.
  • MyEtherWallet: Free, open source, client-side interface for creating Ethereum wallets and interacting with dApps.
  • Trust wallet: Multifunctional electronic wallet for storing BEP2, ERC20 and ERC721 tokens.
  • ...

These are the applications that people use the most. In addition, it can list applications of ethereum with Defi such as: Loans, Investments, Payments, Insurance, Predictive markets, ...

Decentralized exchange (DEX) and Ethereum

Summary

Temporarily understand this method reduces the risk of property hacks and many other risks.

Decentralized exchange can be mentioned as: Peer-to-peer network, ... Along with peer-to-peer networking is a dapp decentralized application, this is where users interact with smart contracts.

There is a very hot peer-to-peer trading platform, binance P2P. You can buy and sell in VND.

Watch now: Binance P2P? Instructions to buy and sell coins in VND

Decentralized applications (Dapps)

Decentralized application dapp along with peer-to-peer network, this is where users interact with smart contracts. This section is my expansion to list more for Ethereum beginners who can easily access it:

What makes Ethereum dapps different

Apps built on Ethereum (dapps) can do things that normal apps can't:

  • Create new digital currencies and assets.

  • Web applications cannot be intercepted and cannot be controlled.

  • Build decentralized organizations, assets, or a managed virtual world.

Dapps on Ethereum are web applications powered by Ethereum smart contracts. Instead of using centralized servers or databases, these applications rely on blockchain as an auxiliary for logical math and program storage.

This leads to potentially unstoppable potential applications: Anyone can deploy a copy and freely connect it to the public Ethereum network.

The applications on Ethereum you may be using

Here is a list of Ethereum dapps you can use right now. Most are available for free download through the Apple or Google Play store or directly through their websites in the form of a demo, betas or full release.

Browser, wallet and gadgets:

  • MetaMask: Browser plug-in application that allows your device to be connected to the Ethereum network.
  • Status: Ethereum mobile browser with token wallet, chat and dApp portal.
  • Brave: A mobile and web browser integrated with BAT and ERC-20 tokens.
  • Opera: Dapp browser with integrated Ethereum wallet.
  • Ethereum Name Service: A utility for generating personalized and simple ETH wallet addresses.
  • Civic: Secure identity and data management on blockchain.
  • Alethio: Ethereum network analysis platform.

See more: What is ERC20 Token? Distinguish Ethereum platform tokens and other tokens

Other applications:

In addition to wallet lists, websites or gadgets. Ethereum's application also spans many other areas such as: Platform, market, Social networks, games, ...

A few examples for brothers to study as follows:

  • IDEX: A decentralized exchange with real time trading and high transaction throughput.
  • forkdelt to: A decentralized Ethereum token exchange.

Assess the decentralized Ethereum platform

Advantages

  • Third parties cannot make any changes to the data.
  • Applications based on a network are formed around the principle of consensus, making censorship impossible.
  • The application is well protected from hacking attacks and phishing activities.
  • The application never stops working and can never be shut down.
  • ...

Disadvantages

Although shows us many benefits of decentralized applications. But besides that we need to recognize the following disadvantages:

Smart contract codes are written by people, so it's almost only good for the people who write them. Code errors or monitoring may lead to unintended detrimental actions. If an error in the code is exploited, the exploit can be stopped in addition to obtaining network consensus and having to rewrite the code.

This goes against the nature of blockchain which is immutable. That is, no one can interfere with the data inside the blockchain.

You want to develop applications on Ethereum

Do you remember that you took the MetaMask application introduced above. It turns Google Chrome into an ethereum browser. MetaMask allows people to easily run or develop decentralized applications from their browsers.

Although originally built as a Chrome plug-in, MetaMask also supports Firefox and Brave Browser. MetaMask and a host of other browsers seem to be making blockchain-based applications accessible to more people than ever before.

Even people without technical backgrounds can now build blockchain applications. This is a revolutionary leap forward for blockchain technology that could bring decentralized applications to the flow like current technologies.

The Ethereum community is made up of many technology developers, users, holders and enthusiasts around the world.

If you are a developer, there are many ways to get involved in the Ethereum community: You can attend an event, participate in forums, contribute to a project on many levels.

To participate directly as a Developer, you should go to the following link: Click here.

Especially you can participate in the chat on the livetream and ask questions about ethereum on the fanpage of Blogtienao such as.

The value of Ethereum

Mining sources of miners decide the value of ETH. Because this is a relatively young platform, often fluctuating in price, many people think that they are of little value and should not be invested.

But if you are the one who learns and closely follows ETH, then you will realize it offers many opportunities for investors.

Ethereum is an open market that allows users to easily buy, sell or exchange in cash or Bitcoin through exchanges or between groups, organizations and individuals.

Especially in 2017 and 2018, Ethereum is a vehicle to help companies raise capital such as EOS, IOTA, ...

In addition, in 2019, Ethereum still holds the second position, But it is no longer a HOT channel to raise capital and is gradually being replaced by other channels.

Maybe they will Bitcoin, Binance Coin or the Coin Flooring to raise capital. Therefore the value of ETH will be changed, although the future is unknown.

So you remember to update the latest news from Blogtienao and then make an investment decision offline!

Watch now: Binance Coin what?

Why does Ethereum not have the maximum supply?

Unlike Bitcoin, ETH has absolutely no supply limit. Why is that? Does this affect the price of ETH? In the future, will ETH's supply be limited?

BTC and ETH supply

According to the development team, Ethereum will not have a limited supply. Because the team doesn't trust the same development path as Bitcoin.

For Bitcoin (built on the algorithm Proof Of Work), for a safety net, miners need to work (create blocks).

In return, miners will be rewarded with BTC and transaction fees for successful mining. However, the reward budget is not permanent since Bitcoin's total supply is only 21 million BTC.

When 21 million BTC were mined, the reward for them was only transaction fee. At that time, there was no guarantee that miners would continue to work to protect the network.

That's why Vitalik Buterin sees the building of ETH on the algorithm Proof Of Work and having a limited supply is not a smart move.

And the Ethereum 2.0 project was launched, starting with the Istanbul hard fork.

Ways to earn Ethereum

Dig yourself or join a dig group

To mine ETH is a process of emulating a problem of miners. On average, one or a group of people will solve this problem every 10 minutes and get the corresponding ETH.

However, the problem of investing funds for excavators and electricity is something to consider carefully if you want to become a miner.

So, you can find groups to dig or share capital with friends. In addition, you can also buy a mine yourself.

But, this method to pay back the capital you need a lot of time and effort.

Invest money to buy Ethereum

In addition to becoming a miner, you can spend money to buy ETH to own them. You can buy from friends (if any) or go to reputable ETH trading sites.

In Vietnam, you can refer to the virtual currency trading pages in the next sections below.

Be a ETH trader

This method is called "Investment in surfing”. Because the price of ETH is often volatile and there are times when the difference is up to several tens / hundreds of USD in a short time.

So many people based on this point, spend their time researching, choosing the right time to buy ETH at low prices and then resell at high prices.

Should we invest in Ethereum?

Whether or not investing in ETH is up to you depends on your point of view. In essence, you invest in this cryptocurrency just like you buy gold or play stocks.

If you know the right time to invest, the potential for profit is very high; due to the constant fluctuation of ETH prices, similar to Bitcoin.

However, more and more countries are accepting Ethereum as a valid form of payment, even more so than Bitcoin.

Most countries do not accept Bitcoin because its management and security are not completely secure.

But with Ethereum, developers have solved that problem, helping to ensure transactions are safe and avoid hacking.

Ethereum's market is growing. From a market capitalization of US $ 25 million in 2014.

To date, ETH's capitalization has increased to more than $ 15.5 billion. For a fast-growing market like Ethereum, investing in ETH appears to be a very profitable opportunity.

Also you can watch Ethereum exchange rate Blogtienao is updated 24/7 in real time to understand its price fluctuations.

In addition, you should regularly update the news about this coin if it is directed to invest it. Because the important news in the world is the factor that directly affects the price of any coin.

Watch now: Should we invest in Ethereum? Instructions on how to invest Ethereum safely and securely

Trading Ethereum at any exchange?

Ethereum coin is a very popular cryptocurrency. Most popular exchanges offer ETH trading pairs.

But with foreign exchanges, it is more suitable to trade than to buy and invest long term.

You can buy Ethereum at Vietnamese exchanges so you can pay directly in VND through popular banks such as Vietcombank.

Some exchanges you can buy and sell ETH in VND: Vicuta floor, Coinhako floor, Remitano floor, VCC floor.

Virtual money blog would like to introduce to you some of the reputable, cheap and supportive Ethereum exchanges such as Vicuta.

In particular, Vicuta market is still the most reliable address of the majority of Vietnamese investors. If you are intending to invest in Ethereum, I would encourage you to use Vicuta. .

Buy and sell Ethereum

Which Ethereum storage is safe?

Before buying Ethereum, all you need to do is create a wallet address (Wallet) to store your Ethereum.

So which wallet is the safest and easiest to use with new investors? You can use "Online / Hot wallet" or "Offline / cold wallet" depending on your needs.

If you regularly buy and sell, you should use a hot wallet, but if you plan to hold for a few months or a few years, you should use a cold wallet.

  • Hot wallet is the web wallet platform. Some of the most popular and used wallets are Blockchain.com, CoinBase or MyEtherWallet. In particular, MyEtherWallet is a specialized wallet to store tokens running on the Ethereum platform (ERC20).
  • Cold wallet are software wallets or USB wallets (shaped like a USB stick), such as Ledger Nano S, nano ledger X or Safe deposit.

However, one thing to note is that cold wallets are always safer than hot wallets.

ETH storage wallet

Conclusion

So Blogtienao.com shared with readers the article "What is Ethereum? Should we invest in Ethereum?

We hope this article will bring you some useful insights. If you have any questions, comment below.

Blogtienao will answer for you as soon as possible.

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3 COMMENTS

  1. Many thanks to the article, for helping me to understand ETH virtual currency.
    I will go to Vietcombank to try to buy some ETH virtual currency, and then also go out there to sell ETH (as a practice).
    Please ask other than Vietcombank, are there any banks that trade this currency?!.

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