What is Ethereum and How does it Work?
The cryptocurrency industry is such a wide universe with over 1200 distinct products, coins and startups. It can really be tasking to keep up with the whole lot, as more and more fresh cryptocurrencies are unveiled with every passing week. And despite the dominance of Bitcoin in terms of actual value, it is Ethereum that has the wider acceptance and influence on the industry overall as it is what is behind the recent proliferation of ICOs.
What is Ethereum?
Ethereum unlike Bitcoin is not a mere cryptocurrency as most people misconceive it to be. It rather is a completely separate alternate blockchain infrastructure different from that of Bitcoin and upon which countless of applications including other cryptocurrencies built.
Ethereum was created in 2014 by Vitalik Buterin at just the age of 24 whose idea was to provide a grand platform that will unleash the innovative sector of the blockchain and cryptocurrency industry, by allowing developers a cheaper way of seeing their ideas come to life by building their diverse range of apps on an already existing, and much improved blockchain infrastructure. The Ethereum blockchain is so massive, and has been designed with the goal that it should be impossible to shut down by any single entity.
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Is Bitcoin what is used for making Payments on Ethereum?
Ethereum also has its own native cryptocurrency which is used for making peer-to-peer payments between individuals as well as used by developers to pay for renting space to build their wide ranging apps. This native cryptocurrency is known as the Ether, and has distinct features that differentiate it from Bitcoin. But Ethereum’s wild popularity among developers is not just because of the Ether, but majorly because of one of its other great features known as Smart Contracts.
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What are Smart Contracts?
Ethereum was built with the focus of offering users a better and more efficient way of doing business than what was possible with Bitcoin and any other cryptocurrency. For example, when making a payment with Bitcoin, the sender has to blindly believe in the integrity of the person they are sending money to keep their own end of the bargain, as Bitcoin transactions are irreversible.
With Ethereum’s Smart Contracts, you are able to assign that a certain amount of Ether should be sent from you to the recipient, only at the fulfillment of certain conditions (which could be delivery of item purchased within a certain period of time), which gives you a safety net from fraud and losses. Smart Contracts are so simple that anyone using the Ethereum blockchain can use them as they are a few lines of instructions that once set in place and agreed by the two parties, neither can tamper with them which also give safety to the seller.
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Can I Store my Ether In my Bitcoin Wallet?
Ethereum and Bitcoin run on distinct protocols and were conceptualized with different source codes, and as such you cannot use a Bitcoin wallet to store or make transactions with your Ether. That would require a separate wallet that caters for this need. Make sure you get the most reputable and security conscious wallet, and if your Ether holdings is quite considerable, you can easily use a vault-like hardware wallet, some of which offer parallel wallets within the same Hardware infrastructure to store alternate cryptocurrencies.
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