If you follow the world trends, then you probably have heard about Ethereum. This name has become quite popular in financial and tech circles and attracted the attention of investors from all over the world. Many people connect it to Bitcoin; there are some similarities, but also some differences. Many experts predict that Ethereum is a rising start of cryptocurrencies, especially after the creation of Bitcoin. The demand for this virtual currency has risen so high, that many miners are trying to generate as much currency as they can. So, let’s discover want Ethereum is?
What is cryptocurrency?
Many investors refer Ethereum as a cryptocurrency, but, that’s not really true. In fact, it is a platform that provides individuals an opportunity to perform transactions and make contacts using the currency called ether. On the other hand, a cryptocurrency is a digital currency created through encryption. It doesn’t have a physical form, such as banknote and it is not issued by a central bank. The cryptocurrency only exists as data on the Internet, and it is managed through a blockchain. People who validate transactions, which means to solve the services of complex computational problems are known as miners.
The difference between cryptocurrencies and regular banks
All digital transactions are recorded and require a third party, for example, bank, to validate an operation. Considering that money, when it’s digital, is some sort of data that can be copied and violated, banks need to protect all transactions. They often don’t work for free, and clients are required to pay a fee. The amount will depend on a bank. On the other hand, cryptocurrencies are all about skipping the banks because they don’t require a third party and you aren’t required to pay fees. In case some data has been changed, every computer on the network needs to validate the transaction and discover tempering. No authority can seize cryptocurrencies because they aren’t stored anywhere. Only a person who has a private key can access it, so it would be challenging for the government to catch it.
Smart contracts are all about Ethereum
You must be wondering what a smart contract is? This is a contract written in code, which creators upload to the blockchain. Every time a contract is performed, every node on the network runs It. When all terms are met, the program shows conditions of the contract. Considering that every computer on the network keeps tracks of the transactions, any violation is impossible. If someone changes the details of contacts, all computers on digital ledger will be able to see them.
What the future holds?
In a short time, this type of trading has attracted a considerable attention of many investors around the world, considering that Ethereum price has grown in the last year. Even some major companies like Microsoft and JP Morgan Chase became the members of Ethereum alliance. Many people think that this is a perfect tool for corporations.