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Ethereum – The Ultimate A to Z Guide for Beginners

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Whether or not you are in the world of blockchain and cryptocurrency, there is no doubt that the word Ethereum rings a bell.


You’ve either seen it in your local newspaper, business news or you’ve even heard it from a colleague, family member or any other person.

If you are wondering why everyone seems to be fussing over it, then take a seat because we are about to fill you in on all the details of Ethereum and by the time we are done, you’ll probably be looking for a way to secure your portion of this cryptocurrency.

What is Ethereum?

Since the bitcoin craze began in 2008, there have been myriads of other cryptocurrencies joining the market. However, not all of them make it to the top and not all of them have managed to remain relevant and be close competitors to bitcoins like Ethereum has.

So what exactly is Ethereum and why is everyone fussing over it? In a layman’s language, it is a virtual coin or cryptocurrency that is more like bitcoin but allows its users to conduct anonymous transactions online.

It functions the same way like bitcoins do and as such, utilizes blockchain technology to enable secure purchases or sales of cryptocurrencies without the need of involving any third parties such as banks. It also facilitates smart contracts in the same manner.

Brief history of Ethereum

Now that you know what it is, where did it come from or when did it rise to prominence? Well, the birth year of this cryptocurrency was in 2013 and was led by Vitalik Buterin. The main aim of its development was to help take the world of crypto and blockchains to another level.

It would achieve this by addressing some of the issues which bitcoins had not addressed and also by solving some of the problems related to bitcoins such as minimizing the confirmation time.

Since its inception, the currency has been doing pretty well and can now be mentioned in the same breath as bitcoins because it is at the top of the pile too.

For instance, it managed to raise more than $25 million in its first crowd sale which was held in 2014. Since then, it has never looked back and has seen substantial growth.


For instance, the world can thank Ethereum for the pioneering of ICO’s which have really helped shape the world of cryptos because using the concept, many investors can now come up with their own virtual currencies without needing too much capital.

What is the difference between it and bitcoin?

Even though there are striking similarities between bitcoins and Ethereum, still there are plenty of differences which make them two worlds apart and here are some of them.

Ethereum is more than a currency

Even though both cryptocurrencies operate on blockchain technology, bitcoin is nothing more than a currency as it only allows secure decentralized transactions. However, Ethereum offers more than that as it can also handle other data types using the same technology.

For instance, it facilitates the running of smart contracts which offers software developers, banks, and other platforms to move funds, creates markets, develops apps and other services required in a decentralized manner while at the same time eliminates the possibility of censorship, downtime or middlemen.

For instance, software developers located in different parts of the world can create apps tog, ether, alter and use them without having to be in the same location because any changes made to the app will be visible to all the others.

This makes things way much easier for everyone. It is more like a world computer because anyone can access it from any corner of the world.

Short block confirmation time

Another significant difference between Ethereum and bitcoin is that uses shorter block time.

One of the main reasons why it was developed is to minimize the block confirmation time used by bitcoin and that it achieved because it uses ten minutes instead of 12 like bitcoin does. That means each minute, miners get more block confirmations than bitcoins.

Other differences

  • Ethereum allows both censored and uncensored transactions while bitcoins only allow censored
  • Ethereum offers various mediums of exchange such as Ethereum virtual machine, ether, and smart contracts while bitcoins can only trade in crypto

What are smart contracts?

We earlier mentioned that besides trading cryptocurrency Ethereum blockchains also hold other kinds of data and that includes smart contracts.

As a newbie, such terms can be quite confusing to you. So what are smart contracts? To help you grasp the meaning, check out the example below.


Suppose am selling a piece of land to you or rather a car. However, you are paying me through cryptocurrency in this case, you are paying me through Ethereum.

So as the seller I will give you the receipt in a virtual contract that means for you to unlock it, you will require a digital key and for me to receive the amount you owe me, you must first get the key.

Once you receive it, the contract will be automatically open and both of us will get what is rightfully ours. Once this is done, the binding document is automatically canceled and neither of us can interfere with it.

Therefore it eliminates the chances of fraudulent activities because first the contract becomes part of the blockchain and secondly, if you try to interfere I will be alerted.

So in other words, a smart contract is more like an ordinary contract only that it is carried out online, through cryptocurrencies, without the need of any middlemen or third party members and lastly cannot be altered with which is why it is smart.

Additionally, it operates on the IF basis. If I don’t send you the key, then no money for me and you automatically get your crypto back and vice versa.

Thus they are beneficial because there are no chances of one party going against the agreement like it happens with ordinary contracts.

What’s even better is that there are no limits to their applications and can be used in all areas from legal processes, insurance premiums to financial services.

With such innovative strategies at hand, it’s easy to tell why Ethereum is winning the hearts of many investors.

How do I get Ethereum?



At this juncture, you are probably wondering how you can lay your hands on this precious cryptocurrency but don’t stress over that because this is your ultimate guide. There are three ways you can get it.

  • Provide goods and services and get payment in an ether
  • Buy it from a legit ether broker or exchange fiat currencies for ether the same way you change dollars into other forms of currency but ensure you get it from a legit exchange provider to avoid being coned
  • You can also mine it from the internet. However, this method is quite hectic and requires a lot of proficiency in cryptocurrency not to mention highly specialized equipment. So unless you have met the stated requirements, stick to purchasing or providing goods and services in exchange for crypto

What are the risks?

With all the perks tag various risks. At the end of the day, nothing is perfect and as such don’t expect the Ethereum journey to be all sunshine and rainbow.

Below are some of the risks to keep in mind before you join the pool of Ethereum investors.

  • Ethereum transactions are irreversible and if you send ether to the wrong person, there are little or no chances of getting it back
  • It’s still new, as mentioned earlier, it has only been on the market since 2013, which means its only five years old so you can never be so sure it will work. With that in mind, avoid investing all your money or too much cash in it to prevent losses
  • It is not backed by any entity. Thus if you lose it in any way, there will be no one to issue a refund
  • Its value is often determined by the number of people who accept it. What does that mean? If only a few people want to use it in transactions or in any other way, then the value decreases leading to losses for those who hold it. However, if the vice versa happens, well and good, you get your profits and cash back

Final thoughts

There is so much to say about the Ethereum bubble but today we’ll rest at that. In a nutshell, if Ethereum survives the highly competitive market which we are optimistic it will, thanks to its unique approach, then it will impact the world in a major yet positive way.

It is supposed to undergo four stages before it achieves its full potential. Currently, it happens to be in the second phase so imagine what it can do once it reaches its full potential. We’ll let you ponder over that.


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