Get to know Ethereum, the Second Largest Cryptocurrency after Bitcoin – What cryptocurrency is just under Bitcoin and created by a 19 year old teenager? Ether in the Ethereum system is the answer.
In this article, Glints will explain the Ethereum system and how it works. Starting from the definition, history, pluses and minuses, to how to invest, read more, OK!
Getting to know Ethereum
To explain Ethereum, Glints will give an analogy. For example, person A wants to send a message to person B. Nowadays, this can certainly be done via chat applications. The message will be sent by person A to the chat application server. So, from the server, the message will be forwarded to B.
What if someone hacked the application server? The contents of your message are certainly scattered everywhere. Not to mention, there is a lot of personal data that you share on the application. Be careful, that data can be used to your detriment. As a solution, there is a technology called blockchain. The blockchain splits that server into several places.
Previously, blockchain was only used for cryptocurrencies like Bitcoin. Well, another form of this technology is Ethereum. It is an operating system or application. In this system, you can build applications to exchange messages through multiple servers. Are you still confused, what does that mean? If so, let’s go back to the chat application example, let’s go!
For example, the application has a fragmented server. That way, when a server is hacked, not all information is leaked everywhere. With Ethereum and blockchain, all of this is possible. Such a system is often referred to as decentralization. Because, there is no one place to store all your data. The data is scattered everywhere.
History of Ethereum
Ethereum is the work of a 19 year old teenager. Glints has already mentioned this above. The teenager’s name is Vitalik Buterin. Initially, this Canadian-Russian man was interested in the blockchain system. According to him, this system can create a democratic environment everywhere. From businesses to organizations to currencies, no one party really controls everything.
Buterin finally pitched this idea to the Thiel Fellowship organization. He ended up getting $100,000 in funding to build Ethereum. In the development process, Ethereum is also assisted through crowdfunding.
The crowdfunding process was assisted by other developers such as Dr. Gavin Wood and Joseph Lubin. Ethereum also managed to get funding of 18 million US dollars. Finally, in 2015, this one system was born. It continues to grow until it becomes as big as it is now.
Ethereum as the Pioneer of Blockchain 2.0
One of the technologies used by Ethereum is blockchain. Glints has already mentioned this above. Well, said BitDegree, the blockchain itself was coined by Bitcoin. Even so, it turns out, Ethereum makes this information system even better, you know.
There are several innovations in the Ethereum blockchain, namely:
1. Smart contracts
For example, you want to buy eggs on the market. 1 kg of eggs has a price of Rp. 20 thousand Because you shop a lot, merchants also give you a discount. You only need to pay Rp. 18 thousand for a kilo of eggs.
Flexible transactions like this are certainly profitable if they occur in the market. Unfortunately, in buying and selling online, this is very dangerous. When selling something for 50 thousand, you may only receive 45 thousand. In fact, the goods have been sent and received by the buyer.
This is where smart contracts come into play. From the start, the sale and purchase transaction has been set up to be: IF the buyer pays Rp. 50 thousand, THEN you will give the goods. Once this contract has been made, it cannot be changed again. The contract can only be left or executed according to the existing provisions.
This technology is also known as trustless transactions. You don’t need to trust the seller or the buyer. If only one party does not comply with the contract, the transaction will not occur.
2. dApps
dApps stands for decentralized application. This technology has already been alluded to by Glints above. Typical applications have a centralized server. If this server is hacked, your personal data can be spread everywhere. It’s different with dApps. Servers in this application are fragmented into many places making it difficult to hack. To write this application, you need a special language like Solidity (like JavaScript).
Ethereum and Glints Investments have made it clear that Ethereum is an operating system. Then, what does this system have to do with investment?
Ether (ETH) is the answer. It is the prevailing currency in the Ethereum world. So that you don’t get confused, Glints will explain how it works. When developers want to build dApps, they certainly need money. In addition, when hosting applications on the Ethereum environment, they also have to spend money. This is where Ether comes into play.
Developers pay when building applications and hosting. Well, when you want to use those dApps, you can pay the developer in this currency. The more complicated an order, the more Ether you have to pay. This also applies the other way around.
In fact, says Investopedia, Ether is more like fuel than currency. However, it has similar properties to cryptocurrencies. Launching the official Ethereum website, you can send Ether like money. It can also be exchanged for other cryptocurrencies such as Bitcoin. As Business Insider wrote, as of the end of January 2021, Ether is the second largest cryptocurrency in the world after Bitcoin.
Plus Minus Investment Ethereum
With a system like the one above, are you interested in investing in Ether currency? Eits, wait. First understand the advantages and disadvantages, come on! By knowing this information, you will certainly not seem rash in choosing an investment instrument.
- The advantage
of Ethereum has a clear founder and was developed by many developers. This makes it one of the most trusted platforms. What’s more, the blockchain makes the Ether currency a decentralized system. It can be an alternative for today’s banking world. You should also consider Ethereum valuation. Remember, it is the second largest cryptocurrency in the world.
- Disadvantages
Unfortunately, Ether is a highly volatile currency. This is written by Nova X Report. The price could go up really high for something. Unfortunately, the price can also suddenly fall for other reasons. To outsmart this volatility, you can learn various analyzes. That way, you really know when to buy or sell Ether.
How to invest in Ethereum
After understanding all about Ether, are you interested in investing in this currency? Previously, you had to have an Ethereum Wallet first. After that, you can buy Ether. Well, there are several ways that you can choose. Summarized from BitDegree, the ways include:
1. Buy using regular currency
Don’t have any cryptocurrency at all? Don’t worry, you can buy Ether with regular currency, really. You can use broker services such as:
- Coinbase
- Coinmama
- and others.
There is also an option to buy it through P2P buying and selling services.
2. Buy with cryptocurrencies
You want to exchange Bitcoin, Litecoin or other cryptocurrencies for Ether? Can you?
There are several crypto trading services that you can choose from. Alternative Ethereum exchange services are:
- Kraken
- IDEX
- and others.