When Bitcoin was launched, it brought a great revolution in the market; people can do peer-to-peer transactions without intermediary parties and the financial institution. But, the architecture of Bitcoin was designed in such a way that it only supported the monetary peer-to-peer transaction from one user to another, and there was no possibility to build any peer to peer application using the Bitcoin blockchain.

Hence, a Russian-based student at the University of Waterloo named Vitalik Buterin decided to build a Blockchain 2.0 to support peer-to-peer transactions. People could leverage that Blockchain to build a decentralized application. 

What is Ethereum? 

Like Bitcoin, Ethereum is also a blockchain whose native cryptocurrency is ETH. This blockchain network acts like a global computer that allows a user to perform decentralized computing and build complex applications such as financial tools, games, and even databases on top of it.  

Differences between Ethereum and Bitcoin Blockchain

It is more likely to be a cryptocurrency that Ethereum Founders decided to expand through their Ethereum Blockchain. Bitcoin is the digital money that served the purpose well and brought a big change. But there were a few limitations like, Bitcoin was more like gold which was only used as a store of value with a limited supply cap of 21 Million. 

Whereas Ethereum had the ambition to overtake it and revolutionize the infrastructure that would ultimately automate many processes that currently require intermediary parties such as fund managers or app stores. 

Advantages of Ethereum

Along with anonymity and decentralization, there are quite a few more advantages of Ethereum, like no censorship. Unlike traditional social media, where users get removed from the platform when they post something offensive, there is no censorship on the network or applications deployed on Ethereum. Also, on different social media platforms built on Ethereum, anyone can publish anything if their post gets a minimum number of votes from the community. This gives more power to the community rather than a single entity. The community can prevent suspicious actors from taking over any platform. If anyone wants to control the network, it needs to have control over 51% of the network, which is quite impossible for anyone to do.

Apart from censorship, Ethereum supports smart contracts. Smart contracts are nothing but a code where business logic is defined based on which actions take place autonomously. For example, currently, on applications like Upwork, the platform takes care of everything from setting up payment between the client and freelancer, but with a smart contract, you can code this. Such as “if the work is done in X time, then the client must be paid some amount”. All the rules are coded, which can be deployed on the Ethereum blockchain, after which it cannot be modified or changed. 

What consensus Algorithm does Ethereum follow, and how does it work?

Ethereum works similarly to Bitcoin works. It follows the proof of work consensus mechanism to ensure the network’s security. Different nodes or miners compete to verify a set of transactions and put them in the block. Once the transactions are verified, and the block is confirmed, it is appended to the Blockchain and made available publicly. Miners whose blocks get confirmed and validated are paid fees, also known as gas in terms of its native token ETH.  

An Insight on Ethereum Mining

Currently, Ethereum mining is completely based on the Proof of Work, where nodes or miners compete to propose the block first and get some rewards. Such people run software that utilizes huge computing power, which causes many environmental issues because it consumes a lot of electricity. Hence, to avoid that, the Ethereum community has decided to shift to a new consensus algorithm known as Proof of Stake. 

Proof of Stake: A proof of stake is a consensus algorithm where nodes who want to become validators on Ethereum Blockchain to validate transactions and create new blocks would require now to lock some tokens or Eth. Whoever proposes the correct block and gets it added to Ethereum Blockchain based on the algorithm would receive a Block Reward. As per a proposal, every validator would need to lock 32 Ethereum tokens to become a validator. 

Different Use Cases of Apps built on Ethereum

On top of Ethereum, people could build a decentralized application known as Dapp. Unlike traditional applications, anyone could use these Dapps by connecting their cryptocurrencies wallet to perform any action, where users need to pay a fee to act as the miners. In recent few years, Decentralized Applications have become quite popular. People have been building financial tools such as Decentralized Exchanges or Staking Applications where any user could stake their cryptocurrency and earn some interest in it. 

Apart from Decentralized Finance, people have been building Non Fungible Tokens, also known as the NFTs, containing different artwork. Any user can buy such NFTs and collect them just like children who collect playing cards. According to the surveys, people have made billions of dollars by collecting and trading such tokens. 

These are just named a few; many developers are doing research and working to build innovative applications such as social media applications, Decentralized games where any player could collect assets, grow them and get some profit. Also, there are a lot of prediction platforms where people can make predictions and earn some rewards if their prediction gets right. All such applications are autonomous that are managed through smart contracts. 

How to Invest in Ethereum?

Ethereum is quite a promising cryptocurrency, and there has been a huge surge in its price. In 2019, the Ethereum Price was around 100 USD, whereas now it’s more than 3k, which is a 3000% rise. If you are impressed with its architecture ad and use cases and want to invest in it, you can go to any cryptocurrency exchange like Carret and purchase it. Some basic steps about how to invest in Ethereum are given below.

Step 1: Go to a cryptocurrency exchange like Carret, Open an Account by Providing the Details.

Step 2: Complete KYC and load some INR using the payment gateway.

Step 3: Choose an ETH/INR pair and place an order.

Step 4: Store the Ethereum in your wallet.

To open an account on Carret, You need to provide some personal information such as your date of birth, Name, Income Proof, Identity Proof, and a lot more. After providing such details only, you will be allowed to make investments and fund your account with Fiat Currency, Like INR. 

Once you have done funding, you can place your order based on the Ethereum pricing and amount that you wish to buy. If your bid matches the selling order, your order will be completed, which will load your wallet with Ethereum displayed on your portfolio. You can leave it if you’re aiming for long-term investment, else you can do trading. Almost all cryptocurrency exchanges display the charts and order books that are important components used while trading. If you want to do some technical research analysis, you can use tools like tradingview charts to use advanced indicators on the chart. 

Should you Invest in Ethereum?

This is one of the most common questions that people ask about when they invest in any asset, be it Bitcoin or any other cryptocurrency. To answer this question, Ethereum is one of the most valuable cryptocurrencies after Bitcoin and has the highest market capitalization. Many decentralized applications are coming up that will be deployed on the Ethereum chain. 

Suppose you check the volatility of the crypto market. In that case, it is always recommended that you do complete research about the token before you make an investment and put in a significant amount of money. However, you may consider Ethereum part of your aggressively growing portfolio. But it is always recommended that you don’t invest more than the amount you are willing to lose. 

What does the Future of Ethereum look like?

In recent years, there has been huge progress made in Ethereum’s ecosystem. A lot of decentralized finance projects and NFTs have come into existence. With the emergence of new applications, the network effect has been triggered, and a lot more tech enthusiasts and developers are looking forward to building applications. Dapps or Decentralized Applications using Ethereum are the buzzwords in the Blockchain and cryptocurrency ecosystem

Also, in the coming few months, Ethereum will be going under a major upgrade, and Ethereum 2.0 will be launched using the Proof of State consensus mechanism. This will increase the scalability and reduce the gas fees that users need to pay while using Decentralized Applications or Dapps. There is much more to come in the Ethereum ecosystem because now, whatever has been deployed is just the tip of the iceberg.