- March 15, 2023
When it comes to the world of crypto and blockchain, one of the most popular blockchain ecosystems is Ethereum which was released back in 2015.
Ethereum is essentially a decentralized blockchain that uses its native token, ether (ETH), to facilitate transactions on the blockchain. It also has its own smart contract framework, which allows for creating smart contracts.
Ethereum, Let's Break It Down
To start with the basics, Ethereum does not rely on a single source for computing power, unlike most computers today. Instead, it is a decentralized network, meaning that the computing power comes from many different sources, and all the nodes in the network work together to create a “virtual decentralized computer.” As a result, it eliminates the weakness of having a single point of failure and thus proves the many benefits of decentralized blockchains.
In addition, Ethereum allows for the creation of smart contracts, which means that it allows for the creation of rules regarding a transaction between multiple parties. Traditionally, one may rely on a third party or a centralized authority to enforce a contract.However, Ethereum allows for smart contracts by allowing the contract participants to establish a contract with nothing but blockchain technology between them.If a smart contract’s conditions are satisfied on the Ethereum blockchain, it will allow for an Ethereum transaction.
Ethereum Use Cases
The use cases for smart contracts are endless, and many believe this technology will disrupt many existing industries where contracts are enforced using an intermediary. One of the main things to note is that the Ethereum network performs transactions using its native Ether (ETH) cryptocurrency.
Ethereum (ETH) is the second largest crypto when measured by total market cap and trails only behind Bitcoin. Its total market cap at the time of writing is roughly over $200 billion, indicating this blockchain network’s size and growth. However, transactions on the network are not free of cost because the transaction cost is something called gas.
Gas Fees Explained
Gas is usually paid using a percentage of the ETH that a user is trying to send in a transaction and covers the cost of the trade. The gas fee varies, as it depends on the current status of the network, how many miners are on the network, and the general transaction volume. High gas fees on the Ethereum network have sometimes been called out as one of the cons of the Ethereum network and is one pain point many investors hope will change in time.
Your Keys, Your Crypto
Ethereum is an example of a proof-of-stake network, meaning that users who provide their own ETH to gain rewards validate network transactions.
Ethereum’s algorithmic model differs from Bitcoin’s algorithmic model, which is proof-of-work. As with all cryptocurrencies, the most important thing for any investor to understand is that safe access to ETH will require the user to have access to the Ethereum private key. The private key is the only way for the blockchain to verify that you are the owner of an ETH wallet. Therefore, owning the keys is critical to ensuring you have self-custody of your ETH.
At ByteWallet, we acknowledge this fact and take pride in keeping your investments safe from scams and mismanagement. Unlike most well-known online exchanges, when you purchase and store your crypto within your ByteWallet, you hold your keys, which means you hold your crypto.