Ethereum (ETH)
Introduction
It is natural with technological breakthroughs for systems we use to evolve, and in 2008 Bitcoin was introduced as the first system able to replace the traditional financial system using blockchain technology. So naturally, people started asking themselves, can we do more with this new blockchain technology? Once again, tech-savvy folks began exploring and creating, and behold, Ethereum was born.
Ether (ETH) is the native cryptocurrency of the blockchain network Ethereum.
Ethereum is the world’s first general-purpose programmable blockchain. Unlike Bitcoin, which was created to be the world’s first digital currency allowing the transfer of value between parties without intermediaries, Ethereum has built on top of that, allowing users to use blockchain technology to create distinct kinds of applications that impact many other of the world industries besides finance, such as gaming, art, logistics, etc.
What is Unique About Ethereum?
Like Bitcoin pried the door open for the new concept of finance with cryptocurrencies, Ethereum has elevated this to a new level by giving people new possibilities with crypto and blockchain technology that will lead to many new technological advancements.
Ethereum has also started a new path in cryptocurrency networks, where it is almost imaginable for a cryptocurrency network not to have some distinct programmable features. One of the most prominent features Ethereum has given us are Smart Contracts, self-executing pieces of code that require no human to work.
You can consider Smart Contract to be a vending machine. If the required amount of cash is inserted into a machine, you get the product. If not, you need to insert more. If the amount is over the price, you get the product and some change back.
Smart Contracts are the way people are able to create different automatized actions and applications on Ethereum that require no humans to operate or adjust.
Finally, Ethereum is the home of over 3000 different applications that use cryptocurrency in various industries besides finance.
Token Information
Where can You Use ETH?
Here are some of the use cases for your Ethereum (ETH) tokens:
- Pay for fees associated with transactions and the usage of Ethereum Apps.
- Exchange it for physical and digital goods and services.
- Lend it.
- Borrow it.
- Soon you will be able to stake it and impact security and the governance of Ethereum’s future. More on that later.
Price History
At the time of writing (April 2022), Ethereum’s price is $2865. The current Market Cap ranking is #2, with a market cap of $345.4B.
Like Bitcoin, Ethereum has closed the last year on a strong note reaching an all-time high price of $4812, which is around 6.5 times bigger than the price at the start of 2021. However, 2022 has started with a market correction, reducing the prices of all cryptocurrencies, including Ethereum.
Throughout its existence, Ethereum has averaged a year-on-year return of 179.2%
Tokenomics
Unlike Bitcoin, Ethereum’s supply is not capped, and it can go to infinity. But here is the catch. ETH burns 60% of users’ fees when transacting, thus making it a deflationary asset.
Ethereum also had an initial token distribution in the early days of the network, and it went as follows:
- 80% of the initial 72 million token supply went towards the public sale of the tokens, which raised around 31000 BTC, equivalent to approximately $18.4 million.
- The remaining 20% or around 12 million tokens were allocated to the Ethereum Foundation and early Ethereum contributors.
The current token circulation of Ethereum is 120,563,235.
Where to Buy ETH?
As the second-biggest cryptocurrency globally and the primary currency needed to use all apps built on Ethereum, Ether has become an in-demand asset. It is available for purchase in many ways, with a high supply available since it is not capped.
The primary way people buy their Ether is through centralized exchanges because they offer the ability to purchase them with credit\debit cards, which most people prefer.
Although significantly more complicated, the second way is through decentralized exchanges such as Uniswap. Decentralized exchanges usually require users to already have some cryptocurrencies in their wallets to buy other cryptos.
Finally, it can be purchased easily through a broker app such as our Veli App, where you can get your hands on some Ether in just a few taps on the screen.
The Team
Eight people co-founded Ethereum:
- Vitalik Buterin: Russian-Canadian programmer that wrote the first Ethereum whitepaper, describing how it works. He is still working on the improvement of the platform.
- Gavin Wood: British programmer who coded the first technical version of Ethereum. He also created the Solidity programming language used on Ethereum’s apps today. He has since left the team and has founded the Web3 Foundation and one other popular blockchain network, Polkadot.
- Anthony di Iorio: He underwrote the Ethereum project in its early development
- Charles Hoskinson: He helped establish the Ethereum Foundation and its legal framework. He has since left the team and founded the blockchain network called Cardano.
- Mihai Alise: He assisted in establishing the Ethereum Foundation
- Joseph Lubin: A Canadian Entrepreneur who helped fund Ethereum in the early days and later created ConsenSys, an incubator for startups based on Ethereum.
- Amir Chetrit: Helped co-found Ethereum but left in its early development stages.
The Roadmap
This is the official roadmap of Ethereum:
The Merge (Q2 2022 Estimated)
This upgrade marks the beginning of the transition to proof-of-stake consensus. This eliminates the need for energy-intensive mining and replaces it with staked Ethereum to safeguard the network. A fascinating step in realizing the Ethereum vision – more scalability, security, and sustainability.
Ethereum is currently secured using computational power from users with the process called Proof of Work or mining. The switch represents going to Proof of Stake or staking, where users will deposit the Ethereum they own to secure the network.
Shard Chains (2023 Estimated)
Shard chains should be available in 2023, depending on how rapidly work following The Merge goes. These shards will give Ethereum extra storage and data access, allowing it to process up to 100K transactions per second.
Community Growth
Ethereum has amassed a huge community over the years of existence. It now has hundreds of thousands of developers, designers, enthusiasts, etc. The popularity is so massive that there are over ten official Ethereum conferences globally and many others where Ethereum is one of the main subjects.
There is a lot of stuff to do in the Ethereum community, from contributing to a project, finding a job in many companies based on Ethereum, joining different kinds of organizations, or even funding your own Ethereum startup with the power of grants.
The Backers
Ethereum Foundation has raised $18.4M in funding over nine rounds (ICO). Their latest funding was raised on May 1, 2017, from a Secondary Market round. Investors are Alexis Berthoud, Julian Sarokin, Zachary Snader, 8 Decimal Capital, Placeholder, Arbi Khodagholian, Block Ventures, Winklevoss Capital, KR1, George Burke, and many others.
Legal Activity
Besides the regular cryptocurrency regulation talks and possible new laws coming, Ethereum has not had any legal problems whatsoever.
Network Activity
Ethereum is growing rapidly as more and more people are interested in it due to its new technological breakthroughs. Here are some numbers to show it:
- The number of active users is 557.3K
- The number of transactions made by users in a day is 1.1M
- The number of transactions made by users per second is 13.09
- The number of unique users that have created an Ethereum wallet is 150.6M
- 56.4% of the circulating supply has not moved for over a year, meaning users are holding their Ethereum for the future.
- The number of available Ethereum on exchanges is reducing, making it a more demandable and scarce asset.
Competition
Ethereum has a lot of competition. Some of those are Solana, Cardano, Avalanche, etc. However, the main competitors are BNB and the #1 market cap blockchain, Bitcoin. Let us see how Bitcoin, BNB, and Ethereum compare.
Bitcoin is the world’s first cryptocurrency and it differs from Ethereum in the way that it only serves as a store of value and transfer of value between parties while you can use Ethereum to build different kinds of apps. The competition is currently at what cryptocurrency will eventually be worth more.
BNB is the first blockchain network to follow in Ethereum’s footsteps in being programmable and allowing users to build apps on it. However, BNB is slightly faster than Ethereum and all the apps built are centered around the products that the Binance exchange offers.
Here is also a table that illustrates the competition through some numbers.
| Bitcoin | Ethereum | Litecoin | |
| Transactions Per Second | 7 | 15 | 56 |
| Time Needed to Confirm a Transaction | 60 min | 6 min | 3-5 min |
| Average Transaction Fee | 1.62$ | 15$ | $0.03-$0.04 |
| Market Cap | $713b | $310b | $9.3b |
| Circulation Supply | 90.62% in circulation |
no limit on the number of tokens |
83.58% in circulation |
| Total Number of Wallet Addresses | 951.6m | 150.6m | 134m |
| Total Number of Daily Active Users | 913k | 509k | 303k |
| Launch Date | 2009 | 2015 | 2011 |
| Average Growth Rate | 80.79% | 178.20% | 90.44% |
Potential Risks
As with any other asset class, there are risks involved when it comes to investing. Since there are many kinds of cryptocurrencies, risks can be grouped into two categories – general risks that apply when investing in cryptocurrencies and risks that only apply to specific assets.
We have prepared a guide that addresses general cryptocurrency investing risks and offers tips on how to mitigate them, while risks that only apply to specific assets are addressed directly in the coin guides such as this one.
Ethereum Investing Risks
- High Fees: Ethereum has gotten pretty popular in 2021 due to the rise of different kinds of new applications. This has led to network congestion because many users have onboarded pretty fast. It has increased transaction fees from sub $1 to somewhere between $4 and $150.
- Competition: Ethereum is currently the king of programmable blockchains. It has been here for the longest and still offers a lot of utilities that other blockchains still cannot provide. But the industry is progressing at tremendous speeds, and new projects are coming out left and right. They are all fighting for that Ethereum’s #2 or possibly #1 spot.
Useful Links
Website: https://ethereum.org/en/
Twitter: https://twitter.com/ethereum
Conclusion
Ethereum is the world’s second-largest cryptocurrency and a native token of the blockchain network with the same name. Ethereum has started a revolution in the crypto and blockchain industry by being the first blockchain network that allows users to leverage blockchain technology and create different applications for many present industries. Ethereum is a pioneer in a new technological breakthrough called Smart Contracts, self-executing pieces of code that require no humans to operate.
The price of Ethereum has made a 6.5x jump from the start of 2021, reaching an all-time high price of $4812. The average year-on-year return of Ethereum is 179.2%. It has attracted many investors throughout its lifetime, raising over $18M in nine funding rounds.
With an exciting roadmap ahead, which will potentially allow it to achieve 100K transactions per second, we can only sit back and wait to see where Ethereum is headed in the future.
