Ethereum: A Brief Overview
Ether was launched on July 30, 2015, alongside the Ethereum blockchain. It was created by Vitalik Buterin. Ether plays a central role in the Ethereum ecosystem, being used in smart contracts and decentralized applications (dApps).
Every transaction and execution of a smart contract requires payment in ether, which incentivizes the operation of nodes and miners within the network. There are about 120 million ether in circulation.
Advantages of Ethereum
- High Liquidity. Ether is one of the most liquid digital assets. It can be bought and sold quickly and easily.
- Wide Application. Ether is used not only for transactions but also to power many decentralized finance (DeFi) applications, increasing its utility and market demand.
- Low Fees. Proof-of-Stake (PoS) and the EIP-1559 have helped reduce transaction fees, making the network even more accessible for users.
- Environmental Sustainability. With the transition to PoS, Ethereum has reduced its energy consumption by 99.9%, making ether one of the most environmentally friendly cryptocurrencies.
- Security. Ethereum is decentralized, and its security is ensured by the PoS consensus mechanism and cryptographic algorithms.
Ethereum’s Transition from PoW to PoS and Its Ecosystem
Ethereum initially used Proof of Work (PoW), where miners solved complex problems to validate transactions, but this method was energy-intensive. To address these issues, Ethereum transitioned to Proof of Stake (PoS) through the Ethereum 2.0 upgrade. This transition began with the Beacon Chain launch in December 2020 and completed with “The Merge” in September 2022, combining the Beacon Chain with the Ethereum mainnet. PoS is more energy-efficient and allows anyone with a minimum stake of 32 ETH to participate in network validation.
Key Applications in the Ethereum Ecosystem
- Uniswap. A decentralized exchange (DEX) for trading cryptocurrencies directly from wallets.
- MakerDAO. A platform for creating Dai stablecoin collateralized by cryptocurrencies and real assets. Ranks the first place among DeFi protocols of Ethereum ecosystem by blocked liquidity. Dai is among the top five largest stablecoins.
- Aave. A decentralized lending and borrowing platform.
- Compound. Similar to Aave, allowing users to lend and borrow cryptocurrencies.
- OpenSea. The largest marketplace for buying, selling, and trading NFTs.
- CryptoKitties. A game for collecting and trading virtual cats.
- Decentraland. A virtual reality platform for creating, exploring, and trading digital assets and virtual real estate.
How to Trade Ethereum
You can buy ETH in your Bitbanker account. In the “Buy and Sell” section, the coin is available in pairs with RUB and USDT. Note that for operations with fiat currencies, you will need to verify your identity through the KYC (Know Your Customer) process.
Available orders for ether trading:
- Limit and Market Orders. The fee for limit orders is 0.10%, and for market orders — 0.15%.
How to Store Ether
You can safely store ether on Bitbanker. For additional security, we recommend enabling two-factor authentication (2FA).
Ethereum Network Standards
The ether cryptocurrency supports three main token standards:
- ERC-20: a standard for fungible tokens. For examples USDT, the largest stablecoin, and USDC, a dollar stablecoin issued by Circle.
- ERC-721: a standard for creating non-fungible tokens (NFTs) — unique digital objects and collectibles.
- ERC-1155: a hybrid standard for both fungible and non-fungible tokens within a single contract.
Ethereum on Other Networks and Wrapped Tokens
Wrapped ether (WETH) is a version of the ERC-20 cryptocurrency. WETH was created to trade and interact with decentralized applications (dApps) and other blockchain platforms. Ether can be exchanged for WETH and vice versa through special smart contracts.
Note that wrapped ether’s price is pegged to regular ether. The coin was created for other networks. However, wrapped ether is not the same as regular ether. When buying it, you are entrusting the value and security of your coins to another network. At Bitbanker, we only use genuine ether.