Lots of Ether

Ethereum

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Open Software Blockchain Platform—Ethereum

Everyone who has been in cryptocurrency for a while will know that Ethereum is an open software platform based on blockchain technology. The platform was written by the precocious and brilliant Vitalik Buterin, a Russian-Canadian, plus one other unknown developer. Their token/coin is the Ether, which has a Market Capitalisation second only to Bitcoin. However, Ether still has to undergo exponential increase in value, meaning that it is available, at the time of writing, for under USD300 per coin.

The Ethereum blockchain has been described as ‘the new internet‘ and ‘a world computer‘, because it effectively connects computers throughout the world, and enables millions of secure transactions, apart from simply buying or selling Ether.

Ethereum logo

The symbol for Ether – my preferred colours…

Building on the Ethereum blockchain, developers can create and deploy decentralised applications of just about any kind, including creating new crypto-currency coins, which is why most ICOs are based on the Ethereum blockchain. Any transaction based on the Ethereum blockchain is validated by Ethereum miners, meaning that new coins based on this ‘world software platform’ do not have to invest time, money and effort recruiting miners to validate transactions, with a transaction meaning any Ethereum encrypted communication between users, or in other words, transactions on a ‘smart contract’ — more about that later.

This building on the Ethereum blockchain differs significantly from a so-called Hard Fork on, for example, Bitcoin, when Bitcoin Cash was created, as some miners chose to support a new protocol still based on Bitcoin, but with important differences that are not relevant to the subject of this article.

Essential Ethereum?

I’d say yes, Ethereum has done what all crypto-currency formation groups want to do, made their codebase essential. Over 1000 crypto-currencies  built on the back of the Ethereum codebase means that Ethereum has become an essential base-language for building new coins/tokens and maintaining those already existing, using Ethereum code. Coindesk outlines what has happened since  back in 2015, when Ethereum became ERC-20 compliant:

QUOTE/ [Bullet points are mine, links are theirs.]

  • ERC-20 defines a set of six functions that other smart contracts within the ethereum ecosystem will understand and recognize.
  • These include, for instance, how to transfer a token (by the owner or on behalf of the owner) and how to access data (name, symbol, supply, balance) about the token. The standard also describes two events – signals that a smart contract can fire – that other smart contracts ‘listen’ for.
  • Together, these functions and events make ethereum tokens work the same almost everywhere within the ethereum ecosystem. As a result, nearly all wallets that support ether, including Jaxx, MyEtherWallet.com and Ethereum Wallet (also called Mist Wallet), now also support ERC-20 compliant tokens.
  • ERC-20 defines a set of six functions that other smart contracts within the ethereum ecosystem will understand and recognize.
  • These include, for instance, how to transfer a token (by the owner or on behalf of the owner) and how to access data (name, symbol, supply, balance) about the token. The standard also describes two events – signals that a smart contract can fire – that other smart contracts ‘listen’ for.
  • Together, these functions and events make ethereum tokens work the same almost everywhere within the ethereum ecosystem. As a result, nearly all wallets that support ether, including Jaxx, MyEtherWallet.com and Ethereum Wallet (also called Mist Wallet), now also support ERC-20 compliant tokens. /UNQUOTE

Incidentally, my favourite hardware wallet, the Trezor, is also now ERC-20 compliant, which means that you can basically store just about any coin safely. And you should! Store safely that is! I was speaking to a friend last night who didn’t even know what 2FA (Two Factor Authentication) is all about! She also didn’t know that she had to keep her Secret Keys safe. It was just luck that she has never had to use a secret key to recover an account. I personally have had to do so. It will happen to everyone eventually because amongst other things, platforms can get corrupted and have to be reinstalled from backups, your computer can get a virus despite your best efforts, or it crashes permanently, or you have to delete and reinstall Google Authenticator, and without your secret key you may not be able to log into a platform or exchange because you will no longer have the 2FA code you set up. (So write down that number at the bottom of the barcode on sites when you are enabling 2FA, and keep it safe because you can manually enter it into the Authenticator App to recover you codes. But note please, some exchanges/platforms issue you with another secret key apart from the secret code that represents your own individual barcode. Note the difference — Secret code = barcode. Secret key= a secret key issued once you have authenticated your account with a platform/exchange and they’ve given you a secret key to be able to access your account incase everything else goes wrong. It may look something like 8ZzC15RdfgT21. Keep both the codes and the keys written down or printed out and very safe in a place that only you will know about.

On the Ether

To clarify, although most ‘altcoins’ are riding on the backbone of Ethereum, the Ether coin/token itself is embedded into the Ethereum codebase, and that is one of the things that makes it a valuable asset. If you are going to be using Ethereum to write a smart contract, owning Ether is not only a good thing to do in terms of investment, it’s a clever investment because you are also backing your own new token or whatever smart contract you’ve built on the Ethereum blockchain platform.

And if you buy altcoins because of the low cost meaning that you may be able to buy thousands of them for less than the cost of a night out, or even less than the cost of a pint of beer, and high potential profit once they start going up in price, (people have made € Millions this way) you are still a muscle supporting the Ethereum backbone.

To Summarise

Although if you look at the Ether price charts, you will see the usual swings in value, especially looking at daily or weekly charts, over the longer term the value is rising inexorably, and that trend can only continue. And to put two and two together, a continuing trend of rising value means good investment potential. Ether is not like gold or silver. It’s more like Bitcoin, in that dips in value last months at most rather than years, before the price rises to new highs. At least that is what I’ve observed with all the bigger coins.

Due Diligance

But don’t take my word for it! I’m not a financial advisor! Before making any investment, do your due diligence. That’s an essential part of being sensible with your money. Be a sceptic! You might decide there are other things you’d rather do with your money. Where would you like to put your investments? Somewhere you’d rather put your money, or somewhere you’d rather not put it? You won’t know unless you do research on the matter. For financial advice, most people would tell you to seek out a financial advisor who won’t charge you more than he or she helps you to make. If you can find one. Read about Financial Adviser Lawsuit Trends on Commercial Trial Law.

Become your own expert is probably the best advice I can give.