Ethereum FAQs

The second most popular cryptocurrency, only to Bitcoin, Ethereum stands out as sparking entire industries (yes, more than one) of blockchain-based projects. From decentralized applications (dApps), decentralized finance (DeFi), and decentralized exchanges (DEXs), Ethereum is the base that started it all.

We’ve collected some of the top questions about Ethereum from around the web, so let’s dive in and answer them all.

What is Ethereum

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Ethereum is the ‘firstborn’ of the revolutionary Bitcoin. But beyond being only a store of value like Bitcoin has been until late, Ethereum integrated smart contracts on its network, allowing other cryptocurrencies and projects to build on the Ethereum blockchain. 

Ethereum has created a decentralized ecosystem where apps can be built and run with no downtime, censorship, fraud, or third-party interference. 

In 2013, Vitalik Buterin, the creator and inventor of Ethereum, released the Ethereum white paper, sharing his vision for a decentralized blockchain where developers could build and leverage the technology. Written from the ground up using a bespoke code, Ethereum attempted to achieve everything that Bitcoin could do but better. 

Utilizing smart contracts and a programmable interface, Ethereum allowed thousands of developers worldwide to contribute to the blockchain codebase or develop their projects altogether.

Ethereum allows for the creation and distribution of Ether tokens, representing virtual shares, assets, proof of membership, and more.

What is the Native Token of Ethereum?

In 2014, the Ethereum blockchain was funded through an ICO. During the ICO, native tokens were called Ether (ETH), which were given in exchange for bitcoins. Ethereum quickly raised over $2.2 million within 12 hours. By the end of the sale, they had raised nearly $17.3 million by selling more than 50 million ETH tokens.

Ether token’s primary function on the Ethereum network is as a “fuel” or “gas” that enables the Ethereum blockchain to send messages and perform operations. However, ETH is also used as a store of value. 

What is Ethereum Mining?

Ethereum mining is how new Ethereum is added to the Ethereum blockchain. Ethereum mining may be profitable for home-based miners and professional miners alike. Miners use traditional graphics cards or take advantage of specialized mining hardware to help verify cryptocurrency transactions on the network. 

Ethereum mining serves two purposes:

  1. New blocks are generated via mining, allowing new Ether tokens to be created.
  2. Ethereum miners receive Ethereum transaction fees in which users pay so that their transactions can be processed by miners who have them included in the blockchain. 

Ethereum mining has become accessible for anyone with a computer. Hence, anyone who wants to start Ethereum mining may be able to do so right away.

How Do The Tokenomics of Ethereum Work?

Source: pixabay.com

Before we get into Ethereum’s Tokenomics, let’s first define the Ethereum Request for Comment protocol, more commonly known as ERC-20

The Ethereum Request for Comment protocol, also known as the ERC-20 standard, specifies the requirements (or standards) that Ethereum tokens must meet.

Although the ERC-20 standard for fungible Ethereum tokens was explicitly created for that purpose, it enables the creation of non-fungible Ethereum tokens (NFTs) as well. When building a project, there isn’t much of a difference between the Ethereum interfaces for fungible and non-fungible Ethereum tokens.

As a result, most ICOs, many dApps, DEXs, and even DeFi projects use the ERC-20 protocol as a base to launch their projects. Furthermore, they typically opt to create their own Ethereum based tokens rather than using Ethereum’s native token ETH. 

Following the ERC-20 standard makes it simple for app developers to integrate their projects into other ERC-20 based projects without changing any code. 

Tokenomics

The Ethereum network started with 72 million Ether (ETH). The majority (83 percent) of the total (60 million) were distributed to people who purchased ETH in a crowd sale in the third quarter of 2014.

The balance of twelve million ETH in 2015 was divided among 83 early contributors, half based on the date of their contribution. The other half was given to the Ethereum Foundation, a non-profit organization dedicated to promoting the use and development of the network.

Why is Ethereum appealing? 

The short answer: smart contracts. 

Smart contracts give programmers the ability to program on the Ethereum blockchain. This was a considerable improvement to Bitcoin, which had no smart contracts or gave programmers no ability to program their own projects.

But there are other aspects of Ethereum that make it very appealing. 

The sheer number of projects (dApps, DeFi, NFTs, and more) that have been developed on the Ethereum blockchain give support to a very powerful and budding ecosystem that will likely continue to thrive.

How Many Ethereum Tokens are in Circulation?

Source: https://coinmarketcap.com/currencies/ethereum/

Although Ethereum tokens have an infinite supply, their maximum supply is set at 18 million ETH. There is about 120 million ETH in circulation, with a market capitalization of over $500 billion. You can check the latest price here.

Ethereum Foundation

The Ethereum Foundation is a Swiss non-profit organization that manages the development of Ethereum blockchain applications. They have raised CAD $23-million in investment from partners such as the Winklevoss Capital, Block ventures, and 8 decimal capital, to mention a few.

Governance On Ethereum

The mechanism by which protocol upgrades are implemented is called Ethereum governance. It’s worth noting that while people and apps use the protocol freely, this procedure isn’t connected to how they do so. Anyone may participate in on-chain actions from anywhere in the globe. There aren’t any restrictions on who can build an application or submit a transaction. 

However, proposing changes to the Ethereum protocol is a process. A random person cannot just make changes. Furthermore, with many parties relying on Ethereum’s stability, significant updates, including social and technical processes, must meet a high coordination threshold to guarantee that any modifications to Ethereum are safe and widely accepted by the entire community.

A Few Notable Projects On Ethereum

Ethereum has already made leaps and bounds since it was first created. The ecosystem supported several successful projects, including:

Uniswap: A multibillion-dollar decentralized exchange built on Ethereum’s blockchain.

MakerDAO: Ethereum-collateralized stable coins and Ethereum smart contracts for individual debt issuance.

Compound: Ethereum smart contract protocol that facilitates zero-interest loans in Ethereum tokens. 

Bancor: Ethereum decentralized liquidity network that allows Ethereum token conversion with low slippage.

OpenSea: Ethereum decentralized marketplace that creates, distributes, and manages collectibles and NFTs.

What Wallets Support Ethereum?

There are many ERC-20 wallets to choose from, with the most popular Ethereum wallets being: MyEtherWallet (MEW), Ledger Nano S, Trezor Keepkey, Exodus, Jaxx, Metamask, Trust Wallet, etc.

Community Support/Social Media 

Community

      • Reddit -https://www.reddit.com/r/ethereum/
      • Discord -https://discord.me/ethereum
      • Telegram -https://telegram.me/ether

Social Media

Where can I Buy Ethereum?

You can buy Ethereum on Coinberry by signing up for an account here.

Additional Resources

Want to learn more about Ethereum? You’re in luck! We have additional content here that tells you all about this unique and exciting project.