Lessons on Ethereum

Facts about Ethereum (ETH)

Ethereum is a platform that enables users to create applications that are decentralized. It is a blockchain-based operating system that enables users to facilitate smart contracts and decentralized applications (dapps). Ether is the native coin/transaction coin of Ethereum.Thousands of volunteers run Ethereum around the globe, known as nodes. It’s a medium of exchange, just as other cryptocurrencies are. However, it has a special and restricted use.

Ethereum developers plan to use the same technology to replace third parties on the Internet: those who store information, move mortgages, and monitor complex financial instruments. The goal of Ethereum is to decentralize all forms of software and services to more specific financial agreements on social media networks.

Ether is like a car on the Ethereum blockchain to move around, and is mainly wanted by developers looking to build and run applications within Ethereum. Ether is commonly used for two purposes: it is traded as a digital currency exchange like other cryptocurrencies, and used within Ethereum to run applications and also to monetize work. It’s a marketplace for financial services, games and software that can’t censor or steal your results.

However, Ethereum is also a programming language that allows users to create dapps. 

So how do we use Ethereum? 

It’s open to everyone and all you need to start with is a wallet.  There’s a cost to every action made on an Ethereum app, it cost a little bit of ether. 

Facts about Ethereum wallet 

  • It’s made to store the ether.
  • You can access them from your smartphone or laptop.
  • These digital wallets store digital cash in the form of cryptocurrencies like bitcoin and ether.
  • They store the user’s private keys as well, and these private keys are used to access ether.

These are the different types of wallets in Ethereum:

  1. Desktop wallets
  2. Mobile wallets 
  • These wallets can either be custodial (keeps your private key, still using a third-party and poses its own risks) or non-custodial
  • They are less secure as they are running on a laptop or smartphone, it requires the internet 
  1. Hardware wallets 
  • As small as a thumb, more security 
  • Able to sign and send ether transactions without being online 
  • More security because it’s harder to hack and recommended for storing large ether holdings 
  • Examples of popular hardware wallets are Ledger and Trezor 
  1. Paper wallet 
  • Print or carefully handwrite a private key on a slip of paper and keep it somewhere secure like a safety deposit box 
  • MyEthereumWallet, or MEW, is one popular service for generating key pairs directly on your computer

There are differences between the concepts of these wallets, convenience and security. The more convenient it is, the less safety it provides. (vice versa). It’s important to remember your private keys as if you’re losing it, your ether’s going to be gone forever.

Are you interested in purchasing ether? How are you doing this?

The methods are: 

  1. Centralized exchange 
  2. Compatible ATM
  3. Buying in person or a peer-to-peer marketplace 

How does Ethereum work? 

A growing, decentralized list of transaction records is a blockchain. Each machine on a network, operated by volunteers from anywhere in the world, holds a copy of the blockchain. It replaces the intermediary with that multinational apparatus.

Ethereum composes of these factors: 

  1. Smart contracts 
  2. Ethereum Virtual Machine – executes the rules of Ethereum, ensuring that a smart contract follows these rules 
  3. Ethereum blockchain – the history of Ethereum, records of every transaction that has been made and every smart contract are stored here 
  4. Ether – Ethereum’s token, needed to make transactions and execute Ethereum’s smart contracts
  5. Proof-of-work – This is the consensus model of Ethereum, the glue that holds the entire system together, ensuring that the rules are followed by everyone on the network

Decentralized application, what is that? 

Decentralized applications (dapps) provide services similar to those provided by traditional consumer applications, but use blockchain technology to give users greater power over their data by eliminating the need for centralized data processing intermediaries, thereby “decentralizing” the service. When the users of the platform increases, the fees increase too. 

Key characteristics of a dapp: 

  1. Open source – anybody can copy or audit it 
  2. Decentralized – no central authority to stop users from doing things they desire on the app 
  3. Blockchains 
  4. Using Ethereum Smart Contracts – applies any rules automatically
  5. Global – anyone in the world is able to publish or use these dapps 

The uses of dapps:

  1. Financial apps – DeFi 
  2. Semi-financial apps 
  3. Other apps – online voting, storage, etc 

What is Ether?

Market capitalization Ether (ETH) is the primary token of the Ethereum blockchain and the second largest cryptocurrency in the world. Like bitcoin, the largest cryptocurrency, ether can be used to transfer payments directly to another person without the need for an intermediary. Ether acts as the primary ‘fuel’ for any Ethereum-based app 

So what could Ether be used for?

  1. Payments 
  2. Powering / using dapps 
  3. Transaction fees 

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