Blog Crypto The Ethereum Blockchain: What’s All the Fuss About?

The Ethereum Blockchain: What’s All the Fuss About?

date April 13, 2022 time 5 min read 691 views

Ethereum is one of the most talked-about cryptocurrencies, but the Ethereum blockchain can be tough to get your head around at first. For one, it’s not setting out to be an alternative to traditional currencies, but rather to create the perfect decentralized infrastructure for other crypto projects and applications to exist on. The result has changed everything about the blockchain world.

Known by some as the “sensible” guy of crypto, the Ethereum blockchain has attracted its fair share of plaudits and fans since its launch back in 2015, and it now holds the title of crypto number two. Few would deny that it’s more versatile than bitcoin—you only have to look at the hundreds of projects currently built under the protocol to see that. But even after all this time, many people remain unsure of exactly how ethereum works, what it is, and what you can buy with ethereum.

If you’re one of them, it’s time to clear the air once and for all. We’ll go through a brief overview of ETH, its price history, and the mechanisms behind the protocol.

Ethereum coin review

Most people know Ethereum for its native coin, ether (or ETH). If you’re unfamiliar with the crypto world, you might assume that ether is much the same as bitcoin—yet the two crypto projects aren’t really comparable when you look at functionality. 

If you’ve ever wondered how Ethereum works, we’re here to provide all the answers.
If you’ve ever wondered how Ethereum works, we’re here to provide all the answers. (Source: Unsplash) 

Bitcoin was created to be an alternative currency: A way of using and exchanging money to do the same thing as traditional fiat currencies (like the US dollar or Euro) but in a decentralized, secure, and anonymous way. In contrast, Ethereum can be used as a currency, but its main use is to provide the foundation for all kinds of blockchain applications. 

Founder Vitalik Buterin created it as a way to bridge the gaps in the crypto world, believing that blockchain technology could offer more than just a way to buy and sell currencies. Fast forward to today, it’s fair to say he did a pretty good job—it feels like blockchain is being used for just about everything.

We’ll expand on this later—for now, all you need to do is understand that Ethereum is more than just money.

ETH price history 

Back when it was first launched, ETH was worth a mere $0.75. Around a year after its launch, it started gaining traction, obtaining a value of $14.43 in September 2016. Considering the price increases that would come later, it looks like the value remained stationary on the price chart below, but this represented a significant rise at the time.

However, the first major spike would come in January 2018, when the ETH price zoomed up to $1,396—quite the increase from those initial days. A few months later, the buzz was over and the price dropped down below $500, before hovering just above $100 for the next couple of years. Those who bought ETH at the high point were probably kicking themselves, sure that they’d bought into a bubble that had popped once and for all.

Hopefully they didn’t decide to sell low though, because in February 2019 it reached a value of $1,960—and in November a value of $4,168. As they say, good things come to those who wait. 

The power of the Ethereum blockchain has seen the ETH price soar over the years.
The power of the Ethereum blockchain has seen the ETH price soar over the years. (Source: CoinMarketCap)

Since then, it would be an understatement to say that ETH has been volatile. It crashed down to $1,817—then increased to $3,952, crashed to $2,807, rose to an all-time high of  $4,812 in November 2021, then dropped down again.

It’s recently been going between $2,500 and $4,000. Who knows what could happen next?

How to buy ETH

Considering ETH is the second biggest cryptocurrency of all, it should hardly be surprising that it’s available from pretty much every exchange under the sun. Buy it from Binance, Coinbase, FTX Exchange, or just about anywhere else. Whether you should is another question—to answer that, you’ll need to understand how Ethereum works.

How does Ethereum work?

ETH is more than just a currency—it powers entire applications.
ETH is more than just a currency—it powers entire applications. (Source: Unsplash)

We’ve explained that Ethereum is a platform for building apps rather than just a currency like bitcoin, but you probably still have some questions left in your mind—like “what is ETH coin actually used for?” and “how does Ethereum work?” We’ll answer both of these and more.

The Ethereum blockchain

Just like bitcoin and most other cryptocurrencies, Ethereum is built on a decentralized public ledger that stores details of all transactions. Also similarly to bitcoin, it uses a proof-of-work process to verify the transactions that take place, meaning miners compete to solve cryptographic problems and receive ETH if they’re first. The process isn’t exactly the same, but it follows a similar logic. 

(However, note that Ethereum is in the process of transitioning to Ethereum 2.0, which will be a proof-of-stake instead to solve its scalability problems and boost transaction times). 

Yet the Ethereum blockchain can operate more complex computations than Bitcoin, which makes it suitable for launching other applications on. It also executes smart contracts, meaning Ethereum can execute agreements that would usually rely on third parties—for example, ensuring an item bought only gets transferred after the buyer released their funds.

This all makes Ethereum the perfect place for creating decentralized applications. Unlike creating software on (for example) Google, the developers will maintain control of their program and be able to run it without a third party.

One popular application of Ethereum is issuing non-fungible tokens. The ownership history of an NFT is stored on the Ethereum blockchain, and once someone purchases that token (using ETH), a smart contract ensures its safe delivery and names the new owner on the ledger.

But Ethereum can be used for a range of other things too, including:

For example, Chainlink and Compound are both built on Ethereum.

What can you buy with Ethereum?

That pretty much clears things up when it comes to Ethereum the blockchain. But what about Ethereum the coin? 

Although its primary purpose is to enable the building of applications, it’s often used within those applications as the main payment method. For example, you might use it within an ETH-based exchange to buy other cryptocurrencies, within an NFT marketplace to purchase an NFT, or to purchase in-game items in a game. 

You’re also likely to use it to pay ETH gas fees, which compensate miners for verifying transactions. 

However, others simply see ETH as a crypto investment asset to HODL over the long run. 

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Now you understand quite how powerful the Ethereum blockchain is, you might be keen to get involved.

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George Schooling

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