Ethereum(ETH), the second-largest cryptocurrency, has been having strong competition with the largest coin Bitcoin recently. The price has recorded an approximate 450% increase since the beginning of the year. ETH came as one of the alternatives to Bitcoin at first, but now, it is another potential investment option that potentially brings similar profits as Bitcoin.
While investors might see the two coins as similar coins or concepts, what is different from Bitcoin is that Ethereum serves as more than just a store of value or medium of exchange. Ethereum, itself, works alone as the system under the blockchain for storing all the transaction data. At the same time, it also launches its own associated cryptocurrency, ETH.
That being said, ETH relies on Ethereum’s mature blockchain technology, which is backed by major companies. The usage of the Ethereum blockchain gives faster processing transactions speed. Therefore, Ethereum’s network has always been commonly used in the blockchain world.
In case you are still unsure what Ethereum’s network and the cryptocurrency ETH are, we will guide you through what Ethereum is and how it works in the crypto industry!
What is Ethereum?
“What is Ethereum?” This is probably the most asked question by crypto beginners who just stepped into the Ethereum space. Ethereum is a large open-source and operating system, according to Investopedia. This Ethereum technology handles loads of programming and computing running on the blockchain. With the resources and funds it owns to support its network development, the industry commonly uses the Ethereum blockchain. It is a decentralized and blockchain-based system, but also a competitive coin in the digital currency market.
The cryptocurrency Ethereum builds on the Ethereum network and has been competing with Bitcoin since its debut in 2015. ETH is now the second-largest cryptocurrency, which is only second to Bitcoin in terms of market capitalization. In the mid of May, ETH surged 7% and passed $4,000 with a total market value of $483.4 billion. The market potential and active development of ETH, therefore, make itself an appealing coin to investors.
How does Ethereum, the blockchain technology work?
Ethereum is like a massive transaction machine that works based on blockchain technology. It records millions of transaction status in the massive “database”. Users with access to the blockchain can check on every single cryptocurrency address on the Ethereum blockchain anytime, and see the current status of every transaction. When there are actions that cause the states to change, they will automatically synchronize to the blockchain network. Eventually, everyone can view the latest status and information of the transactions. The Ethereum network assures every trading-relating data is fully transparent, so that all transactions can go through safely and securely. And with the usage of the network, it is efficient to update loads of transaction data and status online, and views by all users on the chain.
How does ETH, the network’s native cryptocurrency work?
Like what has been mentioned previously, ETH works under the basis of a blockchain network. It works similarly to the other digital assets, like Bitcoin. There is a shared digital ledger for every cryptocurrency, and all the ETH transactions data will be stored inside. And all the data stores inside of the ledger publicly, users with access to it could view all the data and amendments. Thus, making all the transaction data fully transparent to everyone in the blockchain, that malicious transactions or actions could be avoided.
Further, ETH is the Ethereum network’s native cryptocurrency, if investors trade ETH using Ethereum applications, you can pay a smaller amount fee using its network. And investors could also make sure you trade ETH on an Ethereum original and reliable network.
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ETH trades contain a certain level of risk like every investment. You should always evaluate the associated risk level before investing in any of the investment options!