Demystifying Ethereum: Understanding the Basics of this Cryptocurrency

Cryptocurrencies are becoming more popular daily, and one of the most talked-about in recent times is Ethereum. It enables smart contract functionality. If you plan to invest in Ethereum, this article explores everything you need to know.

What is Ethereum?

Vitalik Buterin, a Russian-Canadian programmer, created Ethereum in 2014. It is a blockchain-based platform. The platform allows developers to build decentralised applications (DApps) and smart contracts. Ethereum has its cryptocurrency, which is called Ether (ETH).

How does it work?

Ethereum uses a blockchain to store transactions and smart contracts. A blockchain is a decentralised ledger that records all transactions. Each block in the chain contains a stash of the previous block, creating a chain of blocks. This makes it almost impossible to tamper with the data stored on the blockchain.

Smart contracts allow for the transparent execution of agreements, as the code is visible and self-executing. Smart contracts are self-executing contracts between buyer and seller, directly written into lines of code. The code and the agreements contained therein exist on a blockchain network.

What is Ether?

It is the cryptocurrency of the Ethereum network. Ether is used to pay transaction fees and computational services. Ether also incentivises developers to build and maintain DApps on the Ethereum network. The value of Ether has increased over time, and as of March 2023, it is trading at over USD 2,000.

What is Gas?

Gas is a unit that measures the computational power required to execute transactions and smart contracts on the Ethereum network. When a transaction or smart contract is executed on the Ethereum network, a certain amount of gas is required to complete the task. Gas is paid for in Ether, and the amount required depends on the task’s complexity.

What is DApps?

Decentralised applications, or DApps, are applications built on a blockchain network. These applications mean no central authority or middleman controls the network. DApps can be used for various purposes, from online marketplaces to social media platforms.

What are the advantages of Ethereum?

One of the main advantages of Ethereum is that it enables the development of decentralised applications. These can be built without a central authority or middleman, making them more transparent and less censorship-prone. Ethereum also allows for the creation of smart contracts, which can automate the execution of agreements.

Ethereum has a large developer community, so many resources are available for those interested in developing DApps. Ethereum is also more energy-efficient than Bitcoin, as it uses a proof-of-stake consensus algorithm instead of a proof-of-work algorithm.

Buying Ethereum from a Crypto Exchange

If you plan to invest in Ethereum, buying it from a trusted crypto exchange is wise. The process involved in purchasing from a crypto exchange is straightforward. First, you must sign up for an account with a reputable cryptocurrency. Once your account is set up, you fund your account using a bank transfer or debit/credit card. You can navigate the Ethereum trading page to buy Ethereum with your account balance. The Ethereum will then be credited to your account, where you can choose to hold it or transfer it to a wallet for safekeeping.


Ethereum is a blockchain-based platform that allows one to build decentralised applications and smart contracts. Ethereum’s cryptocurrency, Ether, pays transaction fees and incentivises developers. Ethereum has many advantages, including the ability to develop transparent and trustless applications, but it also faces challenges, including scalability and security issues. However, tactfully navigating the current market scenario, trading and making a profit through Ethereum is possible.



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