what is Ethereum? – Bitcoin – News 2020

Ethereum definition

The creator of Ethereum, Vitalik Buterin, was inspired by the pioneering cryptocurrency, Bitcoin, but with a broader ambition: to change the world. How? ‘Or’ What ? By making available to developers the possibility of building decentralized applications on the Ethereum network. Back to the peculiarities of Ethereum, its history, how it works and how to buy this cryptocurrency.

Definition of Ethereum

Ethereum is a network of open and decentralized blockchains that also produce a cryptocurrency: Ether.

What is a cryptocurrency?

A cryptocurrency means an electronic money allowing transactions to be carried out by means of cryptographic validation. It is a currency known as “decentralized”, because it does not constitute a fiat currency (issuance of coins or notes) and that payments by bank card or park checks are impossible.

A cryptocurrency is therefore an alternative currency which also has no legal tender. It is not regulated by any central body or financial institution, its price not being indexed on a classic currency or on gold.

Different cryptocurrencies

On the other hand, a cryptocurrency can be exchanged on dedicated online platforms, even ensuring a return of money for people who validate operations at the level of network nodes. This alternative currency works on several principles:

  • Disintermediation : its technology and operation do not depend on the usual trusted third parties;
  • Security : the information entered is inviolable, due to a double security device with decentralized architecture and block code;
  • Autonomy : the operating infrastructure costs (computing power and hosting space) are paid in cryptocurrency for network nodes, minors.


What is blockchain?

The security and transparency of cryptocurrencies are guaranteed by the basic technology: blockchain, a gigantic digital book that acts as an indelible and inviolable database. This blockchain ensures the authenticity of transactions through traceability controlled by all volunteer members. These “miners”, paid in cryptocurrency, bring the material providing the computing power and the storage.

A cryptographic process encrypts each block, this code being associated with the code which precedes it in the chain. Consequence: changing a block causes a chain reaction on all the others. The other security mechanism concerns the decentralized architecture, which duplicates all the blocks in each node of the network. Result: no danger of losing data en route.

Representation of a blockchain network

Blockchain is a system that sees itself as revolutionary because it makes it possible to regulate what is not centralized. Moreover, Ethereum highlights Dapps, which are therefore decentralized applications.

Good to know: there are public blockchains like Ethereum and private blockchains like Libra launched, among others, by Facebook. The difference ? One is open to the public, the other has limited access.

What is Ethereum?

Ethereum is an open, decentralized platform that offers developers a blockchain on which they can build decentralized applications (Dapps) by signing smart contracts. These Smart Contracts are scripts executing tasks automatically via the virtual machine EVM (Ethereum Virtual machine) as soon as certain conditions are met.

The Ethereum network provides a cryptocurrency, Ether, which performs two functions:

  • Remuneration of minors who are busy on its network, that is to say the people behind each computer serving as nodes on the network;
  • Remuneration of people who work directly on the Ethereum platform.
Fiduciary representation of Ether

Note: the Ether cryptocurrency is symbolized by the series of three letters ETH on exchange platforms.

History and functioning of Ethereum

The Ethereum project consists of creating a blockchain network in order to offer developers a platform hosting decentralized applications.

The creation of Ethereum

The history of Ethereum begins in 2013, when Vitalik Buterin publishes a white paper on the subject. The following year, the student from the University of Waterloo decided to devote himself fully to his project. Working with Gavin Wood, he is awarded a Thiel $ 100,000 scholarship.

The Ethereum platform was commissioned in 2015, the year in which the foundations of the project were established. Several companies (Bp, Intel, Microsoft) have joined this project, united within the Ethereum Alliance Enterprise entity (EEA). Several modifications are being made to perfect the platform, to enhance its security and efficiency.

Did you know ? The initial block of Ethereum is baptized Genesis block. Launched on July 30, 2015, 60 million Ethers are in presale and 12 million for developers.

In 2016, Ethereum developers must carry out a hard fork (creation of new software from source code), following an attack targeting the Ether fund The DAO. Hackers hijack 5% of the total amount of cryptocurrency in circulation. If the hard fork annihilated the theft and returned the funds, part of the community rejects this choice, leading to the split of the blockchain in two : Ether (ETH) remains the official, classic Ether (ETC) its “spin-off”.

What are the principles of Ethereum?

The main idea of ​​the founders of cryptocurrency was not the enrichment of speculators, but the modification of the functioning of transactions in the world. If, initially, Bitcoin aimed to decentralize the currency, Ethereum wanted to widen the field of action.


In fact, the 2013 white paper lists the possible application examples:

  • Banking transactions;
  • Derivative financial instruments;
  • Market forecast;
  • Data flow ;
  • Creation of tokens (tokens);
  • Data storage ;
  • Insurance contracts;
  • E-reputation and identity system, etc.

Currently, the decentralized applications (Dapps) that are built there are open source, secure, autonomous, always available and simple to implement. Thus, all applications on the Ethereum network share the blockchain.

Where and how to buy Ethereum?

Ether cryptocurrency can be bought, sold or traded for other cryptocurrencies, and even for conventional currencies such as the Euro. Ethereum can be purchased via:

  • Of trading platforms such as Kraken, CEX.IO, Gemini, Etoro and Coinbase Pro (GDAX);
  • Of direct exchange platforms cryptocurrency such as Coinbase, Coinmama and LocalEthereum;
  • Of intermediaries like the brokers Binance, Bittrex and Poloniex.


Operation on Ethereum’s exchange platforms is simple, since it suffices to register by entering certain personal data. The platform then verifies the identity of the subscriber (home address and identity document). The latter chooses their method of deposit (credit card, PayPal or Skrill payment, bank transfer, SEPA transfer, etc.) by selecting their currency. Once the deposit is validated, it is possible to purchase the Ethereum.

Buy Ethereum

To choose the Ethereum buying platform, you have to look at:

  • Deposit, transaction and withdrawal fees;
  • The reputation ;
  • The range of possible means of payment;
  • The security standards applied;
  • The exchange rate;
  • Geographic restrictions.

Good to know: by leaving their Ethers on the platform, the investor takes the risk of being robbed. Better to deposit them in an Ethereum wallet online, offline or physical (USB key, Ledger, Trezor).

Why invest in Ethereum?

Investing in Ethereum (ETH) is no different from investing in other cryptocurrencies. However, its rapid expansion attracts attention.

The Benefits of Buying Ethereum

Ethereum is one of the three most popular cryptocurrencies on the market. Now used for a number of transactions, Ether is also adopted by international institutions and multinational firms, reinsurance elements.

Note: Since 2018, the EEA has brought together more than 200 active members promoting cryptocurrency.

In the long term, investing in Ethereum is interesting because the blockchain network holds more promise for developers than Bitcoin for example. Written in full-Turing code, the Ethereum blockchain displays very fast transaction processing (12 seconds versus 20 minutes for Bitcoin). The technology guarantees problem solving with maximum precision unrivaled on the market.

Unlike Bitcoin, Ethereum is not a threat to banks and financial institutions, but rather a source of opportunity. These players, scalded at the idea that the value chain of transactions escapes them, could take advantage of the Ethereum blockchain to accelerate their services by innovating via smart contracts.

Good to know: Bank of America has created, with Microsoft, an application on the Ethereum network in order to secure the transactions of their customers.

The risks of buying Ethereum

Obviously, its course depends on supply and demand, which implies respecting the basic principles of market functioning. Like other cryptocurrencies, Ether is highly volatile in price. The reasons: an economy that is still not very mature, a field still to be explored and illiquid markets.

The biggest risk of investing in Ethereum is therefore to lose the starting capital. To limit these risks, you must adopt responsible behavior:

  • Limit investments in risky volatile assets;
  • Understand blockchain technology;
  • Monitor the degree of transparency of the cryptocurrency;
  • Find out about specialized reference sites;
  • Learn about the quality of developers at work;
  • Understand the expansion limit of tokens whose volume can be limited.

By listing these common sense tips, buying Ethereum seems far less risky than investing in thousands of other virtual currencies, which don’t offer the same guarantees at all. Through its history, its institutional recognition and the prospects it offers, Ethereum asserts itself as a serious competitor to Bitcoin, especially since its project to change the world still carries an intact ambition.

what is Ethereum? – Bitcoin – News 2020
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