world second Digital currency: For the benefit of the newbies in the world of Cryptocurrency, we’ll take the first few paragraphs to explain what Cryptocurrency is. What therefore is Cryptocurrency? Cryptocurrency is derived from the word cryptography, complicated cryptography that allows for creating and processing digital currencies and their transactions across decentralized systems.
Now, a cryptocurrency is a digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
Cryptocurrencies are typically developed as code by teams who build in mechanisms for issuance (often, although not always, through a process called “mining”) and other controls. In cryptocurrency systems, a user’s “wallet,” or account address, has a public key, while the private key is known only to the owner and is used to sign transactions. Fund transfers are completed with minimal processing fees, allowing users to avoid the steep fees banks and financial institutions charge for wire transfers. There are different types of Cryptocurrencies. To mention the few and most popular, we have:
4) Binance Coin (BNB)
5) Tether (USDT)
Bitcoin is considered an original Cryptocurrency. It is the first and the chief crypto. The cryptocurrencies modeled after Bitcoin are collectively called Altcoins (alternative coins), and in some cases “shitcoins,” and have often tried to present themselves as modified or improved versions of Bitcoin.
While some of these currencies may have some impressive features that Bitcoin does not have, matching the level of security that Bitcoin’s networks achieve largely has yet to be seen by an altcoin. Bitcoin was created in 2009 as open-source software. The author of the whitepaper that established this digital currency was under the pseudonym, Satoshi Nakamoto.
Using blockchain technology, Bitcoin allows users to make transparent peer-to-peer transactions. All users can view these transactions; however, they are secured through the algorithm within the blockchain. While everyone can see the transaction, only the owner of that Bitcoin can decrypt it with a “private key” given to each owner. Bitcoin users control the sending and receiving of money, allowing for anonymous transactions throughout the world.
Now to our topic of discussion, Ethereum.
Ethereum is a decentralized software platform that enables smart contracts and decentralized applications (DApps) to be built and run without downtime, fraud, control, or interference from a third party. After Bitcoin, Ethereum is the next successful Cryptocurrency.
The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can freely access, regardless of nationality or ethnicity. This aspect makes the implications for those in some countries more compelling, as those without state infrastructure and state identifications can get access to bank accounts, loans, or a variety of other financial products.
The applications on Ethereum are run on ether, its platform-specific cryptographic token. Ether (ETH) is the Cryptocurrency that powers the Ethereum network, and it’s the required form of payment for running your app or processing your transaction on the highly-desired Ethereum blockchain.
Thus, ether is like a vehicle for moving around on the Ethereum platform and is sought mostly by developers looking to develop and run applications inside Ethereum, or now, by investors looking to make purchases of other digital currencies using ether. Ethereum was launched in 2015 and is currently the second-largest digital currency by market capitalization after Bitcoin. However, it lags behind the dominant Cryptocurrency by a significant margin, trading at around $3,600 per ETH as of September 2021.
Ethereum is the world’s second digital currency. Ethereum has some features that make it more powerful than bitcoin. For instance:
- Ethereum as a currency can verify transactions in 10 seconds, as opposed to 10 minutes in Bitcoin. A minor advantage of Ethereum over bitcoin is the concept of gas, or the cost of computational power set by miners. It keeps a separate price unit between the value of a cryptocurrency and the actual computational cost, whereas the bitcoin block prize is subject to the whims of fluctuating prices. In practice, the difference is moot, but gas is fairer and more flexible.
- Smart contracts’ productivity added could be more important than the transactions.
- Ethereum’s dApps open a new possibility of edge computing.
Ethereum is a very good investment to venture into. While Bitcoin is really good as a store of value, it doesn’t support smart contracts as Ethereum does. Arguably, Ethereum is equally capable as a store of value. Ether has been competing with Bitcoin for the top spot as the largest Cryptocurrency by market capitalization since its release in 2015 and came close to overtaking Bitcoin in February 2018. Some experts predict Ethereum will “flip” Bitcoin this market cycle and become the dominant blockchain and Cryptocurrency by market cap.
One thing is guaranteed, the cryptocurrency market is more volatile than the stock market. If you’re an investor who won’t lose sight over a short-term loss, Ethereum may be a great investment for you to consider.