vitalik buterin

In a bizarre series of tweets, Ethereum’s founder Vitalik Buterin has granted more than $300,000 worth of ether to three Ethereum startups.

Buterin, whose Twitter name “Vitalik Non-giver of ether” pokes fun at those asking him for free cryptocurrency, granted the money in 1,000 ETH installments. The three startups in question include:

  • Prysmatic Labs – a startup building a sharding client for Ethereum 2.0.
  • Chainsafe Systems – a company building blockchain platforms and smart contracts for other startups.
  • Sigma Prime – a cybersecurity startup working on the lighthouse project for Ethereum.

Buterin handed out the grants in a Twitter thread discussing Ethereum’s lack of focus and urgency regarding scalability. Preston Van Loon of Prysmatic Labs joined the conversation to lament that his team didn’t have the resources to focus on Ethereum full time:

To which Vitalik Buterin replied:

Buterin went on to donate 1,000 ETH to ChainSafe after one contributor claimed he would drop out of university for a grant. The final 1,000 ETH donation went to Sigma Prime after one developer promised to hire new team members.

Buterin confirmed all transactions with a link to the Etherscan block explorer and followed up with a tongue-in-cheek warning: 

Further reading: What is Ethereum? Absolutely Everything You Need To Know

Remember the spring of 2017? Altcoins were booming. Every other week new ERC-20 tokens were minted, shilled, pumped, and dumped. For the day-trader, it was a feeding frenzy like no other. Newbies went broke as the skilled got rich. And early adopters sat staring at green for months. 

All of it seemingly based on obscure whitepapers, contemporary looking websites, hype, and Twitter announcements. Now, it’s happening again. This time you can leave your Ethereum at the door. The star of this show is Monero.

Monero, as you know, is everyone’s favorite untraceable and fungible cryptocurrency. It’s a community project and open source, using a proof-of-work mining algorithm CryptoNight. Like Bitcoin before it, it’s going through a sort of renaissance; forks aplenty. With over 50 different CryptoNight coins, including Monero forks such as Wownero, there’s a lot of ideas brewing.

You can forget Initial Coin Offerings (ICOs) too. These projects are focusing on development first. Build a product and let it grow naturally. Here are some of the most intriguing projects in the space.

Figure 1. Wownero Doge.

Top CryptoNight Projects

Wownero plans to meme its way to the moon and become Monero’s DogeCoin with over-the-top ring signatures and bulletproofs. Others like Loki plan on bringing Monero’s famous anonymity to messenger applications. While less-inspired projects like Sumokoin and MoneroV have embraced the status quo and ASICs. And projects like Masari promising the ever elusive low hanging fruit that is ‘scalability.’

Others are a bit more ambitious. Projects such as Haven Protocol hope to create a stable off-shore banking system utilizing a dual coin blockchain. While Graft aims to become the Paypal of crypto by servicing real-time payment solutions and atomic swaps. Not to mention BitTube; the anti-censorship Youtube clone with a built-in cryptocurrency payment system.

There’s even an “Ethereum of Monero” named Dero looking to bring proof-of-work and anonymity to smart contracts. Using the familiar Golang coding language. Like in the golden age of ERC-20 tokens, the possibilities seem endless.

No ICOs; Development First, Funding Later

These aren’t Initial Coin Offerings (ICOs) either. As Turtle Coin’s homepage points out; there are all too many projects pumped on promises and no product. For the most part, Monero forks and the CryptoNight coins like them are unfunded projects with nothing more than a few passionate devs and lofty goals; believing value will create itself.

Turtlecoin
Figure 2. Turtlecoin.lol Homepage.

There’s no shortage of ideas or coins. With small market capitalizations and lots of room for ‘mooning,’ it’s a penny trader’s dreamland; an early adopters clearinghouse. Even in this bear market, these little-known coins are being pumped and dumped on a daily basis. All happening on courageous homebrew exchanges like TradeOgre.com.

The “Penny Stocks” of Crypto

TradeOgre
Figure 2. Tradeogre.com

Established in January 2018 Trade Ogre has become a consistent, and little known, exchange with coin offerings rarely seen on major exchanges. Offering more than just Monero forks and CryptoNight coins, such as Ethereum and XRP,  Trade Ogre’s is an altcoin feeding frenzy all to itself. Its user interface is simple and Trade Ogre is K.Y.C free (no need to verify your ID). It even has 2FA.

Intuitive and easy-to-use, Trade Ogre’s offerings may even seem overwhelming; much like Cryptopia’s. All you need is some Bitcoin, or Litecoin, an email you can verify and you’re ready to go. You may need to invest some time downloading, learning how to use new wallets, and visiting a couple Githubs. But that’s part of the fun.

If you’d like to join Monero’s renaissance without trading, your Bitcoin mining is always an option as well. You can view a list of CryptoNight coins and mine at https://cryptoknight.cc/. Most of which are listed for trade at Trade Ogre and Cryptopia.

Figure 4. Cryptoknight.cc Mining Pools.

Either way, let’s hope this trend continues and more exchanges like Trade Ogre begin popping up; as well as a few more coins. Be careful out there!

Disclaimer: the author is involved in the Wownero project as a designer and artist.

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Ripple XRP

A version of this article first appeared in our exclusive newsletter. If you’d like Block Explorer’s cutting-edge analysis before it hits our website, sign up now.

November was a rough month in the world of crypto. Despite a spirited bounce last week, we’ve seen $70 billion wiped out across the board since the start of November.

But some cryptocurrencies held up better than others in the last couple of weeks. Here are the numbers since November 14th:

XRP – down 30%

Bitcoin – down 37%

Ethereum – down 45%

Notice how XRP hung on much better than Ethereum and ultimately surpassed it in terms of market capitalization? 

It’s not the first time Ripple’s XRP token has “flippened” ethereum, but this is now the longest it has ever stayed there.

Here are some possible reasons for the flippening:

1. Cryptocurrency Mining Concerns (Yeah, I’m Looking at you, Bitcoin Cash)

As we all know, Bitcoin Cash terrified the markets by splitting in two this month. Miners went to war, threatening to launch attacks on each other and hold the network hostage.

It showed a possible weakness in “mining” cryptocurrencies in that miners can exert a huge influence over the network.

It’s no coincidence that Proof-of-Work mining cryptocurrencies like ethereum, bitcoin, and bitcoin cash fell harder than others.

XRP, which uses a consensus protocol instead, held its value better during the crash, as did others with a consensus network like Stellar (XLM).

2. Utility?

As market prices fall, traders look to put their money in projects with real-world use. Ripple has been on a headline-grabbing spree this year, shouting about their high-profile partnerships with banks like Santander and American Express.

In reality, only a small handful of partners are actually using XRP, but Ripple has successfully given the impression that XRP has real-world utility which may have convinced people to keep their money in the token.

3. All Quiet on Ethereum

While Ripple is shouting from the rooftops about XRP, developers at Ethereum have got their head down. Ethereum enjoyed all the attention in 2017, but the team is now quietly working on the next upgrade, dubbed Ethereum 1x, due next year.

It doesn’t necessarily mean activity or innovation has died down on Ethereum, it just means there are fewer headline-grabbing announcements.

4. The Demise of ICOs

If you wanted to invest in an ICO (initial coin offering) last year, you typically needed to fund it with ether. Now that some ICOs have lost as much as 98% of their value, that excitement has vanished.

Not only is there a lack of ICO hunger, some ICOs are reportedly liquidating their ETH to meet costs. As the premier platform for ICOs, Ethereum is taking a bigger hit than many other major cryptocurrencies.

What do you think?

Is the XRP flippening permanent? Will Ethereum’s big upgrade trigger a resurgence? Leave your comments below!

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Mining crypto currency. Farm for mining bitcoins. Vector flat illustration
  • Proof of Work is the algorithm that powers various blockchains, like Bitcoin, Ethereum, Litecoin, and Monero.
  • Miners solve complex mathematical puzzles using computer power to produce a “block” of transactions.
  • When a block is produced, the miner is rewarded with the native cryptocurrency: bitcoin, ether, or litecoin, for example.
  • Proof of work ensures that blocks are produced at a stable rate and are accurately verified.

Cryptocurrencies work on the principle of a blockchain, where blocks containing transactions are added to the chain to make transactions happen. 

The issue is, the speed and validity of blocks must be kept in check. Proof of Work solves this issue, let’s check out how.

The Problem

Blocks on the blockchain are quite powerful as they confirm the transaction of money between addresses. They also distribute new currency by issuing rewards to the block creator. 

For these reasons, there are two important rules for block production.

  • Blocks need to be verified some way, so that we know what order transactions happened, among other things.
  • We need to control the speed at which blocks are added. If the speed is not controlled, block rewards are added to the network quickly and the worth of the currency plummets.

Bitcoin, for example, has a target block time of ten minutes. If blocks are created too fast, too much bitcoin will be given out to miners, thus flooding the market. Something has to keep that block time regulated.

Enter Proof Of Work

Proof of work solves both of our issues. It’s based on the idea that we include some data in the block that is hard to calculate, but easy to verify. 

In most proof of work cryptocurrencies, this comes in the form of a cryptographic hash.

What is a Hash Function?

A hash function takes a message or piece of data and scrambles it into a long cryptographic, alphanumeric code. 

But the smallest change to the message or data creates huge changes in the code. 

For example:

The SHA1 hash of “Armin Davis” is: 397d23a20e7cf5065238d7cdda5430d62a68445b

But change the capital letters to lower-case…

The SHA1 hash of “armin davis” is: b1371918c95f4693273757a2bc51514dcdfd1697

The hashes are completely different and seemingly random.

But it’s not random. The same input data will always return the same hash. Meaning that we can easily verify that a given hash is right for a given block easily. 

And, if we include the hash of the previous block in ours, we can prove order too.

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proof of work
Proof of work compared against alternative algorithm “proof of stake” Credit: CryptoTechies

What About the Timing Issue?

Hash algorithms are perfect for our verification problem but don’t fix the issue of timing on their own. 

Hashes are designed to be fast to compute, very fast in fact. The time it took to calculate the above two hashes was less than one-hundredth of a second.

But we need to regulate the time, so blocks aren’t produced too quickly.

We have a simple solution to this: network difficulty. 

Simply put, you can change how long it takes to create a block by making it harder to solve the cryptographic puzzle.

bitcoin difficulty chart
As more and more miners devote hash power to the Bitcoin network, the “difficulty” has increased dramatically to keep block production in check. Source: Bitinfocharts

Usually, that means including a constraint that the hash must be below a specific number. And that that number is calculated at specific intervals. 

Now miners have to hash their blocks many times, with each one taking up some time and lots of computer power. In order for the block creator to change the hash of their block, an additional bit of information is added to the block called the nonce. 

A nonce is simply a number that can be modified as the block creator sees fit to change the output hash.

Each time a hash is calculated and does not meet the requirements of the network at that time, the nonce is incremented or otherwise changed and the hash re-calculated.

Often a miner will try a very large number of different nonces before they find one that will be accepted by the network. The total time all miners take to find a block should be somewhere around the block time (ten minutes for Bitcoin). 

And if not, the difficulty is adjusted to keep the timing in line.

Not all Proof of Work Algorithms are the Same…

The hashing algorithm a cryptocurrency uses directly affects how difficulty will work, and what hardware you can run the mining software on. 

To use Bitcoin as an example again; Bitcoin uses the algorithm SHA-256, which is an industry standard hashing algorithm used in many places. 

If you’ve saved a password on a website, odds are it was hashed with Secure Hash Algorithm (SHA)-256 before it was stored. Using industry standard hashing algorithms means they are proven secure and worked on by massive communities.

However, using industry-standard algorithms is both a blessing and a curse. 

A blessing because most hardware will be able to run your software. But a curse (depending on how you look at it) due to one word: ASICs.

ASIC (Application Specific Integrated Circuits) are mining hardware that gives your network a massive amount of mining power. That increases centralization due to price and power demands. The more ASICs you own or control, the more of the network you command.

Some other cryptocurrencies, like Monero, use their own hashing algorithm specifically designed for use in proof of work systems. These have the advantage that developers have complete control over what hardware the algorithm works on best.

Downsides to Proof of Work

There are a few downsides to Proof of Work when compared to other solutions.

First, Proof of Work requires a lot of computing power. And, the more mining power on the network, the higher the difficulty. Meaning that you very quickly run into a situation where those with the cash to buy hardware do. And when you have a lot of hardware, you tend to store all their hardware in one place, leading to centralization.

At worst, this could lead to a 51% attack, whereby one actor, or group of actors, control more than half of the network. If that happens, they could theoretically “double spend” the cryptocurrency on the network.

And second, that computing power needs a lot of electricity to run, and at the high end, miners go looking for the cheapest power possible. This means that miners start to congregate in cities or countries where the power is cheap, again leading to centralization.

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what is ethereum?

Okay, before we get into this guide, you need to do one thing:

Stop thinking of Ethereum as a cryptocurrency.

Honestly! Although Ethereum does use a form of digital currency, it’s much bigger than money.

Ethereum doesn’t aim to be a global cash system like bitcoin. Ethereum is more like… the internet.

It’s often referred to as the “world computer,” but in simple terms, Ethereum is a platform for anyone to build something with blockchain technology.

Ethereum is a playground. It’s like lego. Or Minecraft.

In this guide, we’ll answer the burning questions: What is ethereum? How does it work? Who created it, and where can you buy ethereum? We’ll try to answer them all in plain language. However, you may want to read our explainer on Bitcoin first to get your head around the basics of blockchain.

CONTENTS

PART 1: What is Ethereum? (A Simple Guide for Beginners)
PART 2: What Is Ether, the Currency?
PART 3: Who Founded Ethereum? a Brief History
PART 5: How to Buy and Store Ethereum
PART 6: What’s Next and Who Are Ethereum’s Competitors?

PART 1: What Is Ethereum? (A Simple Guide for Beginners)

Ethereum infographic - ethereum explained

Infographic courtesy of @angelomilan

Ethereum Basics

Ethereum is a gateway for building just about anything on the blockchain – apps, games, contracts, even new cryptocurrencies.

But why would someone create an app on Ethereum rather than, say, the Apple app store or a normal website?

To understand why, let’s take a look at the Apple App Store and its problems.

Firstly, Apple is acting a gatekeeper. Every app must be vetted and approved by Apple. In fact, Apple rejects tons of apps or forces them to change how they operate.

Secondly, all the apps are hosted on Apple’s servers and accessible only to those with an Apple ID

This is the definition of centralization. One company controls many thousands of apps.

Then there are the apps themselves. A banking app, for example, saves your personal details, account numbers, and balance on its servers. Another example of centralization.

Ethereum infographic centralization explained

What’s Wrong with Centralization?

First, there’s the philosophical argument. Should one company, like Apple, really be the gatekeeper to the world’s apps?

Second, there’s the practical argument. If all the apps are stored in the same place (Apple’s servers), it’s much easier to hack. There’s one point of failure.

The same goes for the apps themselves. If all your private information and data is stored on the app’s servers, it’s more vulnerable to thieves.

Even websites are centralized. They’re built on cloud servers owned by hosting companies. One gatekeeper. One point of failure.

But what if websites weren’t hosted on one central server? What if apps didn’t have to be approved by Apple and stored on their cloud?

Enter Ethereum…

How Does Ethereum Work?

Ethereum is like the app store, except it isn’t owned or controlled by any one person or company.

Everything built on Ethereum is supported and verified by thousands of computers, all at once, all over the world. It uses blockchain technology to make sure there is no central authority.

Ethereum infographic how ethereum works

It takes what Bitcoin did for money and applies it to any industry on the planet.

Prefer to Read This Guide as an eBook?

If you’d like a hard-copy of this guide (or just want to come back to it later), download the free pdf version here, no email signup required.

What is Ethereum

How Is Ethereum Different to Bitcoin?

Let’s back up and talk about Bitcoin for a moment. Bitcoin uses the blockchain to record financial transactions with complete transparency and security.

In other words, bitcoin is all about money.

But blockchain doesn’t only have to track money. Blockchain can record just about anything: electoral votes, goods, stocks, oil, contracts, data, home ownership, cartoon cats! (yes, really.)

Ethereum takes Bitcoin’s underlying technology and expands it for everything. More importantly, it allows creative developers to build things on it.

vitalik buterin ethereum circle“Bitcoin is great as a form of digital money, but its scripting language is too weak for any kind of serious advanced applications to be built on top.” – Vitalik Buterin, Ethereum founder.

 

Having said that, Ethereum and Bitcoin do share the same core values that make it so strong:

No censorship – Anyone can build anything they want, without a large company or government limiting their vision. Like Bitcoin, there’s no middleman.

Secured with cryptography – Like everything on the blockchain, building on Ethereum is secure. Transactions are encrypted and there is no single point of failure, so it’s very difficult to hack.

Immutable – Transactions on the blockchain cannot be reversed or altered.

Transparent – All transactions are preserved in the blockchain forever.

Still confused? Watch Ethereum’s founder Vitalik Buterin explain the whole concept:

Okay, so we know that Ethereum is a gateway to building on the blockchain. But what exactly can you do with it?

Ethereum Dapps (Decentralized Applications)

Most developers use Ethereum to build Dapps (decentralized applications). Dapps are just like an app on your phone, or a website, but hosted on the blockchain.

A Dapp is essentially any blockchain project that does something useful.

Bitcoin could be considered a Dapp. It’s a Dapp for transferring money without a bank.

Many thousands of others exist. For example, you might have heard of Cryptokitties. It’s a Dapp for buying and trading collectible cartoon cats. It’s like Pokemon cards but on the blockchain. It might sound ridiculous, but it’s actually quite revolutionary. Every collectible crypto kitty is 100% unique and cannot be duplicated because it’s on the blockchain. The rarity lead one buyer to pay over $100,000 for one crypto kitty.

cartoon cryptokitties collectibles on ethereum

More practical Dapps include Ethlance, a completely transparent freelance jobs portal. There are no fees and every contract between freelancer and client is executed on the blockchain. No more chasing payments for freelancers.

Read more: 10 Most Popular Dapps on Ethereum Right Now

Ethereum: A Launchpad for New Cryptocurrencies

Many of the Dapps built on Ethereum have also launched their own cryptocurrencies.

In fact, some of the biggest cryptocurrencies on the planet started on Ethereum.

EOS, TRON, Vechain, and ICON all started life as projects on the Ethereum network. They have since branched off and created their own blockchain (or mainnet).

A further handful of top 20 coins are still ‘hosted’ on Ethereum, including OmiseGo0x and Binance Coin.

Not only can you use Ethereum to build a new project, you can use it to create new cryptocurrencies.

Ethereum Smart Contracts

Ethereum was also created to execute smart contracts.

The easiest way to understand smart contracts is the much-used vending machine analogy.

A vending machine is a simple contract. It will automatically release a can of coke when the correct amount of money is inserted.

Smart contracts are the same. The contract will automatically execute only when certain conditions are met.

In a more practical example, let’s say you’re buying a house. Normally, a lawyer is responsible for executing the contract. They check whether the money has been transferred and whether the seller has met all the criteria.

On the Ethereum network, there is no human making that final call.

The conditions of sale are written into the smart contract in advance. When those conditions are met (such as money transfer and land survey completion), the smart contract will automatically execute.

The transfer is recorded in the blockchain forever. It is irreversible and completely transparent.

Read more: What are Smart Contracts? (A Simple, Easy-to-Understand Guide)

What’s the Point of Smart Contracts?

Smart contracts eliminate the likelihood of fraud.

In the case above, no lawyer can manipulate the contract or hide conditions, because the smart contract simply won’t execute.

It’s secure. Like Bitcoin, the Ethereum blockchain exists on thousands of computers all at once. There is no single point of failure.

Smart contracts also remove the need for trust in one particular party (like an estate agent or lawyer). The contract is verified by many hundreds of people on the blockchain.

Lastly, the fees are lower. With fewer middle-men, there are fewer costs to pay.

The Countless Use Cases for Ethereum

The potential for Ethereum is phenomenal. It can be used to decentralize everything.

Imagine an electoral voting system on the Ethereum blockchain. Every vote is recorded transparently. No third-party can manipulate the results. No more human error in counting. No more electoral hacks.

Imagine an insurance system built on Ethereum. If your house is flooded, and the damage meets all the agreed criteria, an Ethereum smart contract automatically executes to pay out the settlement.

Ethereum could improve almost every industry on the planet, from healthcare to finance to academia to logistics.

——————————————————————————————–



——————————————————————————————–

Part 2: What Is Ether? the Cryptocurrency That Powers the Blockchain

When people talk about ethereum as a cryptocurrency, they’re actually talking about ether (ETH).

Ether has enjoyed incredible growth (10,000% in 2017 alone). But if ether isn’t a global cash system like bitcoin, what is it?

a chart depicting ethereum's price movement through 2017 - 2018

Ether is often referred to as the “fuel” or “gas” that keeps the Ethereum network running.

It’s a form of currency for developers who build apps and smart contracts on the system.

Let’s say you’re building an app on Ethereum. You pay a transaction fee to build on the Ethereum network, in the same way you’d pay a “hosting fee” for building a traditional website.

If you want to make changes to that app at any point, you pay a further transaction fee. These fees are proportionate to the amount of computer power needed.

That ether fee pays “miners” that maintain the Ethereum blockchain and verify the transactions.

vitalik buterin ethereum circle“Bitcoin and Ethereum are doing different things. Bitcoin is a digital currency, and the protocol is written to sustain this cryptocurrency. Clearly, Ethereum platform has ETH, it is also a digital currency, but it exists to sustain the protocol.” – Vitalik Buterin, Ethereum founder.

 

In other words, the Bitcoin blockchain exists solely to power the cryptocurrency. With Ethereum, it’s the other way round. Ethereum’s cryptocurrency (ether, or ETH) exists solely to power the vastly more powerful blockchain.

What Affects the Price of Ethereum?

In theory, the price of ether should be linked to the growth of the Ethereum blockchain. The more developers build on Ethereum, the higher the demand for ether to pay for transaction fees.

Right now, however, the price is primarily driven by speculation. Like bitcoin, ether is bought, sold and traded on exchanges around the world. Most people hold ether because they hope it will increase in value, not to actively build on the network.

Ether is also heavily tied to the price of bitcoin. Despite wildly different use cases, ethereum and bitcoin have a correlation as the cryptocurrency market moves, by-and-large, as one.

Unlike Bitcoin, Ether Supply Isn’t Capped

While bitcoin has a hard cap (only 21 million bitcoins will ever exist), ether does not.

Founder Vitalik Buterin has suggested a 120 million cap on ether supply, but it’s worth pointing out that his suggestion was posted on April Fool’s Day. However, he later confirmed that a hard-cap was worth considering.

As for current supply, 60 million ether was distributed during the first crowdfunding round in 2014. A further 12 million was gifted to a team of developers working to improve the system, known as the Ethereum Foundation.

Until recently, ether miners generated 18 million ether annually (about five ETH for every block, roughly 12 seconds). Under a new agreement, the community decided to cut the reward down to two ETH per block.

Ethereum Mining

Mining ether operates in much the same way as bitcoin.

ethereum mining

Miners are responsible for maintaining and verifying transactions across the blockchain. In return, they are rewarded with ether.

Transactions are verified and logged in the blockchain by solving complex puzzles (through computer processing). The first miner to solve a particular puzzle mines the block and is rewarded with ether.

Ethereum mining is significantly faster than Bitcoin. While bitcoin blocks are produced every ten minutes, Ethereum blocks are mined every 12 seconds.

Another key difference is who mines Ethereum.

The Ethereum community has always stressed the importance of mining by individuals, not giant corporations and mining pools. In that sense, Ethereum aims to be more democratic and less centralized. (We should point out that large mining pools do still dominate the majority of Ethereum mining).

 

PART 3: Who Founded Ethereum? (A Brief History)

Vitalik Buterin founded Ethereum in 2013 when he was just 20 years old.

Buterin was a huge fan of bitcoin. In fact, he also founded Bitcoin Magazine – one of the leading authorities in the crypto space.

In 2013, he published a white paper outlining his vision for Ethereum. Buterin sent the white paper to some close friends for critical feedback. Instead of criticism, however, he got a handful of co-founders!

More than 30 people wanted to work on the project with him. Ethereum was born.

Vitalik Buterin officially launched Ethereum in 2014 and unveiled the project at a Bitcoin conference. Shortly after, they launched a crowdfunding campaign to sell the ether token.

ethereum timeline

Infographic: Brave New Coin

A Moment That Changed Ethereum Forever

Ethereum has suffered some huge setbacks on its road to becoming the world’s second-biggest cryptocurrency.

The Ethereum “hard fork” was perhaps the most notable.

Here’s what happened. In 2016, hackers stole $55 million worth of ether. (Like Bitcoin hacks, we should point out that the hack did not breach the Ethereum blockchain itself, but software built upon it).

The Ethereum community faced a game-changing decision.

They could reverse the hack (by “resetting” the blockchain) and return the stolen money.

Or they could do nothing, accept the breach and move on.

Both options were problematic.

If they did nothing at this early stage of Ethereum’s development, it would damage the project’s credibility (who’s going to trust their money to a system with such a high-profile hack?)

But if they reversed the hack, it would fundamentally go against the values of Ethereum. The blockchain is supposed to immutable and irreversible.

Ultimately, the community voted to “reset” the blockchain, reversing the hack and returning the stolen money.

However, many Ethereum purists were furious. They believed the blockchain must never be reset. The decision spawned a new cryptocurrency: Ethereum Classic.

Ethereum vs Ethereum Classic

Resetting the Ethereum blockchain created a hard fork.

You can think of a hard fork like a train track splitting in two. The currencies share one single track until a certain point when they split and go off in different directions.

The so-called purists took one track with the $55 million hack still coded into the blockchain. This is now the Ethereum Classic blockchain.

The other track is Ethereum as we know it today: the “reset” blockchain, without the $50 million hack.

PART 3: How to Buy and Store Ethereum

How to Buy Ethereum

Ethereum is usually bought and sold on an exchange, much like bitcoin.

The most popular exchange in the US is Coinbase, but there are many others around the world.

coinbase buy ethereum

You’ll be asked to register an account on the exchange, which often means uploading a picture of your photo ID and proof of address. This is to satisfy KCY (Know Your Customer) and AML (Anti-money-laundering) rules (p.s. want to buy ethereum without ID? Keep reading below).

You can then buy ethereum using USD or your local currency of choice, depending on the exchange.

Can I Buy Ethereum Anonymously?

Yes. There are some exchanges that do not require photo ID or proof of address. However, you may have to buy ether using another cryptocurrency to do this.

For example, you can purchase bitcoin anonymously using the Bitmex exchange.

You can then use bitcoin to purchase ether anonymously on another exchange such as shapeshift.io.

How to Buy Ethereum with Cash

If you really want to go off-grid, you can buy ether with cash. Localethereum.com connects you anonymously with local ethereum sellers. Sellers are verified and rated by buyers, so there is an element of confidence here.

You can arrange a face-to-face meeting to exchange crypto or make a private transfer arrangement. Even your messages on localethereum are encrypted, so it’s private from the start.

How to Store Ethereum

Once you’ve bought ethereum from an exchange, you need to move it to a safe wallet.

You can leave your ethereum in your account on Coinbase or whichever exchange you’re using. However, this storage method is more vulnerable to hacks. (Hackers are more likely to target a large exchange than one smaller wallet).

Choosing an Ethereum Wallet

The right ethereum wallet depends on how you plan to use the ether currency.

If you are investing in ethereum for the long-term, consider a cold storage option. This keeps your ethereum offline so it cannot be accessed by hackers.

Read more: What is Cold Storage for Cryptocurrencies?

However, if you’re using ether to make regular transactions or trades, you might want a “hot wallet” connected to the internet.

Ethereum recommended wallet – A simple choice is Ethereum’s recommended wallet, called Mist. It allows you to store ethereum and any other cryptocurrency built on the Ethereum network. You can also use this wallet to write and execute smart contracts and build Dapps (more on this later). The wallet is downloadable at ethereum.org.

Hardware wallet – While the Ethereum wallet is handy for regular usage, consider a hardware wallet for cold storage. This is a like an external hard drive for cryptocurrencies. While it’s the safest option, there is a downside: if you lose the hardware wallet, your ethereum is gone forever. Popular options include Trezor and Ledger (pictured below).

ledger nano cold storage ethereum wallet plugged into a laptop

Paper wallet – A paper wallet is another form of cold storage. It’s a simple piece of paper with your ethereum public and private key written down. Paper wallets are incredibly safe because no-one can hack a piece of paper. But if the paper is lost or damaged, so is your ether.

Browser walletMetaMask is a browser extension for Google Chrome. It allows you to access Ethereum Dapps and store ether. Be aware, however, that your private key is stored by the browser and can be hacked.

Other ethereum wallets – Another popular option for storing ethereum is MyEtherWallet. It’s a unique web wallet that stores your private key safely on your computer. You can also use it to create smart contracts. Exodus is a desktop wallet with functionality for seven different cryptocurrencies.

PART 4: Can I Build on the Ethereum Network and Access Dapps?

Yes!

The whole point of Ethereum is to encourage developers to build on its ecosystem.

Anyone can build Dapps, write a smart contract or create a new cryptocurrency.

It all revolves around the Ethereum Virtual Machine (EVM): the nerve center (or brain) of Ethereum.

The EVM means developers can build on Ethereum with relative ease (without starting from scratch with complex code). To be clear, this is still advanced territory for the average user. While the EVM aims to simplify the process of building Dapps and smart contracts, it still requires advanced technical knowledge.

(Interesting fact: the EVM is ‘Turing Complete’ which means it has the potential to solve any algorithm thrown at it by developers. As a comparison, the Bitcoin network is not Turing Complete as it only handles monetary transfer).

Here’s where to start when building or accessing Dapps and smart contracts:

State of the Dapps

state of the dapps screenshot

State of the Dapps is a list of all existing dapps on the Ethereum network. It’s the easiest way to see what’s out there right now. All the dapps are categorized into genres, most-used, and top-rated lists. If you’ve already built a dapp, you can submit it to the site, too.

Ethereum Mist Browser

The Mist browser is Ethereum’s official wallet. It’s also a gateway to the world of Dapps and smart contracts.

To get started, download and install the Mist wallet.

When you launch Mist, you are now connected to the Ethereum blockchain. Create an account, and you can use this browser to send and receive ether.

You can also hit the “Contracts” tab to create your first smart contract.

ethereum mist wallet with 'contracts' tab circled

Lastly, there’s a search button which allows you to use the many thousands of Dapps on the network.

MetaMask

MetaMask is a browser extension for Chrome that gives you access to Ethereum Dapps and smart contracts.

The bonus of using MetaMask is that you don’t have to download any software (or the blockchain itself).

It works in much the same way as Mist. You can send and receive ether, create smart contracts, and browse the world of Dapps.

Five of the Most Impressive Ethereum Dapps

Golem – Golem is a revolutionary project that allows you to “lend” your idle computer power to others. Imagine you’re a video maker who temporarily needs more processing power to finish a project. Or a corporation that needs extra data storage space quickly. With Golem, you simply borrow it from others around the world by connecting to the blockchain. Users are paid in the Golem cryptocurrency (GNT) to rent out their computer power.

uPort – uPort is a Dapp built to protect and manage your identity. Using the uPort software, you enter your personal details into a smart contract. Your identity is only shared when certain conditions (which you set) are met. In other words, it gives you complete control over your identity and whom you share data with.

Augur – Augur lets you predict, and bet on the outcome of, just about anything. From the presidential election to the weather to the success of Apple’s next iPhone. You make the prediction and you then ‘trade’ the outcome alongside thousands of others. Augur launched its own cryptocurrency, REP, which is used to reward those that confirm or “report” the outcomes.

Cryptokitties – We mentioned crypto kitties before, but it’s worth repeating. At its core, cryptokitties allows you to buy and trade cartoon cats. Trading rare cats might not be the most powerful use case for Ethereum, but it has become a gateway for mainstream blockchain use. It’s the first truly viral phenomenon in blockchain, hinting at the enormous potential of the technology. It introduces people to Ethereum in a fun, engaging way.

Idex – Idex is building a decentralized exchange for trading Ethereum-based cryptocurrencies. Because it’s based on the blockchain (and not on a traditional server like, say, Coinbase) it’s reportedly more secure from hackers. It uses smart contracts to execute trades.

There are more than 1,800 dapps currently out there with more added every day.

PART 5: What’s Next for Ethereum and Who Are Its Competitors?

After the explosive growth in value in 2017, ethereum spent most of 2018 cooling off.

However, that’s not to say the platform itself isn’t growing…

Fortune 500 Companies Are Using Ethereum (JP Morgan, Microsoft, Intel, Cisco, Mastercard)

If you think Ethereum is just for cryptocurrency insiders, think again.

Some of the biggest companies on the planet are experimenting with the technology. Microsoft, Intel, MasterCard, Cisco, and JP Morgan are all part of the Enterprise Ethereum Alliance, an organization built to advance Ethereum.

Ethereum Alliance list of companies

It’s still early days but blockchain technology has the power to change entire industries. Most smart businesses are dabbling in this new world, and they’re using Ethereum as a testing ground.

Competition from New Projects

Being the first doesn’t always guarantee success.

The platform now faces huge competition from so-called “Ethereum-killers.”

EOS is perhaps the most notable. The project, which was built on Ethereum before launching its own mainnet, is built for Dapps. It is arguably faster, cheaper and more efficient than Ethereum.

Other competitors include Zilliqa, which aims to scale faster than Ethereum, and NEO which facilitates smart contracts without Ethereum’s complexity.

Ethereum’s Scaling Problems

One of the big question marks over Ethereum’s future is its ability to scale. How can it get faster and more efficient?

Developers are currently working on a long series of upgrades to the system. Under the codename “Casper,” Ethereum is slowly shifting from a “proof-of-work” system to a “proof-of-stake” system.

Without getting too technical, this should reduce the computer power required to mine ether and keep the system running.

Ultimately, it will lead to faster transaction times and lower fees.

Watch Vitalik Buterin talk about his plans for scaling Ethereum below:

For now, Ethereum remains the go-to platform for building new technology. It is the gateway to the blockchain, and we are only just scratching the surface of its potential.

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