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The basics of crypto trading

Ethereum

Ethereum
Year 2013
Founders Vitaly Buterin
Origin Switzerland

Ethereum takes the 2nd place according to capitalization and resides in the top 5 of the most demanded coins among investors. The blockchain, smart contracts, a wide field of application – that’s what ensures a promising future for the coin.

The essence of Ether

Ethereum is a decentralized computational platform which provides functioning of smart contracts. The coin itself is a Bitcoin fork, though they have many distinctions in functionality. The role of a database for the cryptocurrency is played by a blockchain.

Ethereum is a second generation cryptocurrency (the first was Bitcoin) which is based on a decentralized mining network.

Ether is an open-source database which contains a public ledger of records of transactions conducted with the currency. All operations are performed in a decentralized way – there is no single administrative body functioning on the platform. Application of smart contracts makes Ethereum a unique currency.

Smart contracts and abilities of the platform

The smart contracts technology is a way to conduct transactions in an automated mode. Internal mechanisms calculate conditions and results of each deal. It allows using Ethereum universally – for example, in providing loans to the public. A number of applications have already been developed on the basis of Ethereum like Weifund which is used for crowdfunding. The creators of the platform themselves note that it can be also applied in non-financial spheres.

The platform was built upon a principle of irreversibility of processes, but after a massive theft of funds due to a hacker attack in the summer of 2016 money were returned to investors through a hard fork. A small part of the blockchain has been rewritten which have undermined the confidence of some users. Those who were against external intrusion are now using Ethereum Classic while others are working with Ethereum. Technically the cryptocurrencies are identical and share the same history of transactions.

What’s complicated about the network?

The complexity of Ethereum lies in the mining of its cryptocurrency. It’s due to a wide scale crowdfunding at the very beginning of the platform’s functioning when institutional investors have received a large number of coins.

The difficulty of generation of Ether is estimated as “above average” in comparison with other cryptocurrencies. The profitability of Ethereum is directly related to the labor intensity of mining. Many users give up mining because of excessively high requirements for the hardware component of the equipment.

The complexities of the coin are also linked to difficulties in downloading and setting up of the wallet which serves for storing of the coins.

History of creation

Ethereum has a complicated and long history. This cryptocurrency has greatly influenced the present cryptomarket. It was first mentioned back in 2013. At that moment Ether was called the second version of Bitcoin.

After realizing the fundamentality of the prospective platform, its developer – a talented programmer Vitaly Buterin – and a team of his assistants – Anthony Di Iorio, Charles Hoskinson, Mihai Alisie and others – started to look for means to raise funds. In 2014 a full-scale crowdfunding project was launched in order to collect money. A Swiss company named Ethereum Switzerland GmbH and the Ethereum non-profit foundation took part in its conducting. The results of the crowdfunding were enormous: it took the team only 42 days to get more than 30 000 BTC.

The official launch of the platform was carried out already in 2015 in a test mode. The upgrade which ensured the system’s stability dates back to 2016.

Positive and negative feedback

Investors and other users who are working with Ether and the Ethereum platform highlight the following particular advantages:

Ether also has a number of disadvantages. One of the most significant ones is associated with somewhat vulnerability of the platform which results from the complicity of the applied programming language. A high “Gas” fee for conducting transactions in blockchain applications within the system and limited bandwidth (especially relevant because of increasing interest in the coin and the platform on the whole) can be also mentioned.

Development forecast

Ethereum’s sale was officially launched on July 30, 2015. The initial exchange rate of the coin was about $ 0,2. Today the price of the coin reaches up to $ 200-230.

It reached its maximum value in January 2018 by showing a $ 1 448 for 1 ETH rate. The course started to decrease fast almost at once.

Ethereum takes the 2nd place according to capitalization yielding only to Bitcoin. Daily figures exceed $ 1,3 billion. The market capitalization is about $ 20,7 billion.

Together with Bitcoin, Ethereum remains the center of the whole cryptocurrency world. The forecast for the coin is presumed positive by many analysts. This is not only due to the technology intensity of the platform and its enormous potential but also because of a notable figure of Vitaliy Buterin who is in charge of it. The developers themselves are planning to extend the field of work by proposing several development branches:

Ethereum is more stable than Bitcoin. That’s why it demonstrates less volatility because of news in mass media and all the hype. Numerous analysts forecast the price of Ethereum by 2020 in the following ways:

  1. The famous cryptoanalyst Bobby Ullery reckons that the share of Ethereum will reach a ¼ of the market, and the coin’s exchange rate will be about $ 11 000.
  2. The LongForecast company provides a less optimistic projection. The price of the coin, according to analysts, will fluctuate from $ 474 to $ 724.

Nearly all analysts agree that the coin will become more expensive even if the price of Bitcoin will go down.

How Ethereum may be applied?

User who want to earn cryptocurrency may use traditional and cloud mining. The latter variant is considered more available and profitable nowadays. To start working it’s just enough to buy hashrate and monitor the mining.

Strong interest in the currency is the reason for its high liquidity. That’s why many cryptocurrency exchanges have listed it. The coin can be also purchased through exchangers. Besides of buying of currency, it’s also possible to earn with them by playing the exchange rates.

Official Ethereum or Mist wallets can be used to store funds. It is installed on a computer but yet significant hard disc space is required as the whole blockchain of the network will be downloaded on the PC. Other types of wallets can be used for storing which include:

The Ethereum technology itself has tremendous opportunities. Buy/sell of cryptocurrency is far from the only way of making money. The platform is being used for creation of different applications exceeding the financial field.

Latest news of Ethereum

The institutional cryptocurrency exchange of San Francisco stated that it was not relevant to call Ether (ETH) an altcoin anymore. In their recent market report from July 24, the SFOX provided detailed reasoning for the statement. The organization claimed that the ETH was more correlated to Bitcoin than any other altcoins.

In their post, the cryptocurrency exchange of San Francisco suggested that the classification of Ethereum as an ‘altcoin’ is no longer accurate. Instead, by correlating ETH to the BTC’s category, we support that Ethereum is an independent unit just as a blockchain, which is publicly recognized as an asset with its own terms and specs.

Apart from the above reasonings, SFOX’s post also contains information illustrating the correlation between different digital assets. The author claims that ETH’s correlation to BTC in a month before July 22 is 0.788. The same correlation parameter of other altcoins to Bitcoin is as follows: Bitcoin Cash (BCH) 0.638, Litecoin (LTC) 0.577, Bitcoin Satoshi Vision (BSV) 0.619, and Ethereum Classic (ETC) 0.602.

In June 2019, the ETH development team approved the integration of the first options in the Istanbul hard forks. In particular, two changes were approved in the code, which will become part of a large-scale network software update.

The fork itself is scheduled for October, and before this event, in September 2019, another update will take place, the result of which will be the launch of the brand new chain version Ethereum 2.0. As part of the update, Istanbul is planned to significantly improve the efficiency of the ETH network. The efficiency of the blockchain will be enhanced by integrating the EIP 131 solution into its work. This protocol will increase the efficiency of checking data on the blockchain and speed up the identification of users. Thus, the traditional options of the ETH chain will be significantly enhanced and improved.

One of the supporters of the startup, Parity Technologies, is insisting on integrating the new protocol into the network in order to launch a smoother intelligent upgrade of smart contracts. Currently, DApps on the ETH network is launched on the basis of the existing Ethereum virtual machine. The October update of the blockchain is expected to increase its flexibility and productivity.

ETH is still in the second position among other cryptocurrencies and has around 200,000 active users of decentralized applications.

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