After the previous lesson, you now have a wallet for cryptocurrencies – but there are a lot more different cryptos that might be worth investing in and have in your wallets than just Bitcoin.
This lesson will teach you about a cryptocurrency that is not yet as popular as Bitcoin but that gives great opportunities.
What is Ethereum?
Ethereum is a blockchain-based software language and platform that accommodates the second largest cryptocurrency in the space, ether. Ethereum is also a payments platform that can transfer value globally without any third-party interference.
Today Ethereum's main purpose is value transfer using its native token, ether. It is also open-source software, however, on which thousands of other cryptocurrency projects have been built. Developers have been drawn to the blockchain of Ethereum because of its security and ability to more easily control online data and finances.
Ethereum has ambitious plans to say the least about becoming a “world computer.” While Bitcoin was mainly seen as a tool to disrupt the banking system, Ethereum was built open source in a way to allow thousands of people around the world to build decentralized applications on the platform that would be leaderless. These applications could track finances, store data, and create compound interest in some cases with no interference by their creators.
Vitalik Buterin proposed Ethereum in 2003 when he was only 19 years old. He was one of the pioneers of creating blockchain technology with more use cases than just financial transactions. Vitalik saw the internet as mostly a bunch of centralized actors controlling all of the user data.
He and his peers wanted to change that by creating decentralized open-source software that could be used to give control back to the end-users. By using smart contracts that would define the rules automatically, there were no centralized actors in play that could accidentally leak information or sell it to another company.
What makes Ethereum different from Bitcoin is quite simple. While they are both blockchain technologies and cryptocurrencies, Ethereum is built to decentralize more than just finances. From social media networks, to data security, and even video game tokenization, Ethereum is able to decentralize all of this different data. While Bitcoin is mainly used only as a store of value. Because Ethereum is run by volunteers using independent nodes all across the world, proponents of Ethereum view the Ethereum blockchain as a “world computer.”
This makes Ethereum apps able to compete with the likes of Facebook and Google and at the same time give users more control over their personal data. Though Ethereum has ambitious goals of replacing social media networks and other huge institutions, it has seen a scalability problem. Because all of these decentralized apps run on Ethereum, and Ethereum total supply is limited, these apps need ether to perform which costs money. The more users that use the Ethereum network, the more congested it gets and the more money it takes just to transact a small amount of ether.
Ethereum has been working on Ethereum 2.0 since 2020, and when live promises to tackle these scalability issues the Ethereum blockchain has at the moment. Ethereum 2.0 would make it cheaper essentially to perform the small tasks done on Ethereum apps like posting a photo or listing something for sale on a marketplace. As of writing this, the transaction fees associated with using Ethereum are outrageous.
For example, if someone purchases $10 worth of Ethereum from an exchange, it might only be $5 to $6 that he or she ends up with after the transaction goes through. For these reasons, Ethereum is having trouble scaling to the heights it would like to achieve.
Because of Ethereum's wide range of use cases for blockchain technology, it will definitely be a valuable asset in the future. Though it has some high fees for simple tasks at the present, with the advent of Ethereum 2.0, hopefully, the Ethereum blockchain will be more frictionless and easier to transact upon. The future is bright for Ethereum!
Today's tasks!
As you can see above, Ethereum shows a lot of promise and this is definitely a cryptocurrency to keep an eye on.
If you already now feel you are ready to invest a bit of money into cryptos, this can definitely be a good option and you can then go to one of the platforms with an Ethereum wallet you signed up for during the previous lesson and invest in some Ethereum (both Binance and Crypto.com are great platforms for this and I have Ethereum on both of these platforms myself).
However, the next lesson will give you a lot more info about buying, selling, and trading cryptocurrency, so you might also want to wait until you have gone through that lesson – that is completely up to you.
Next Lesson!
If you are still a bit confused about how to start potentially earn with cryptos, then the next lesson will help you get to the next level.
It will teach you all about how to buy, sell, and trade to actually make a profit.
You will receive an email with the next lesson tomorrow. If you are eager to continue right away, you can find the next lesson here.