22
Mar

Ethereum – Do you really know what is?

Everybody talks about Ethereum, and a lot of people said “Mmm, sounds cool, let me buy some eth”.

Nothing wrong with this, but do you know what really Ethereum is?

Ethereum is an “open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality”.

“Okay man, but i bought some Eth, they are coin, exactly like Bitcoin, Monero etc.”

That’s not completely right neither wrong. Ether (ETH) is the cryptocurrency,  or value token,  provided by the Ethereum Virtual Machine. Ether is not born like an alternative to cash (like bitcoin), but it’s a sort of “fuel” for Ethereum contracts/applications.

Yes, you can trade with it, and it’s certainly faster than bitcoin at the moment, but there are few factors that makes it a strange kind of currency:

  1. The total Ether coin in circulation is not defined: Bitcoin total will be 21M, and nobody can modify it, that mean that, if the bitcoin will continue growing, the price will follow the same trend. The total number of Ether, instead,  is not defined on its protocol, this mean that inflation is a serious risk for Ether.
  2. Bitcoins are “created” by miners. Ether too: every block mined release 5 Eth to the miner. But this is not the only way that Eth’ number can grow. For example in 2014 Ethereum launched a pre-sale of Ether, and raised more or less 14 millions of $ (a sort of IPO – 2000 ETH for 1 BTC)!
  3. This doesn’t mean Eth is a no value currency: Eth is created to be the fuel of the Ethereum Network’ applications and It’s value is directly connected to the number and the popularity of these applications.

There are few aspect that can suggest that ETH’s popularity will grow, the most important is the daily transaction of ETH: during the last weeks we saw an average number of transaction per day of 80-85,000. The max number of transaction per day (at the moment – remember that scalability is one of the best value of ETH network)is around of 740,000, more than double of BTC transactions (at the moment – always keep an eye on BTC fork status). Moreusers, more demand, bigger increase of price.

 

At the moment, very few of the actual investors know what they are buying. We are sure of Ethereum Network’ value, and consequently in Ether value, and we think that the ETH price will have the same grown. Anyway, if you are looking for a cryptocurrency to replace cash, we are not sure that Ether is the best choice.

 

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