What is Ethereum?
Ethereum is a decentralized blockchain platform introduced by Vitalik Buterin in 2013 and officially launched in 2015. It is not only a cryptocurrency like Bitcoin but also an ecosystem that helps developers build smart contracts and decentralized applications (DApps).
Ethereum is considered to be blockchain platform pioneered smart contract support, ushering in the era of decentralized finance (DeFi) and other blockchain applications. The main cryptocurrency of the Ethereum network is Ether (ETH), which is used to pay transaction fees and execute smart contracts on the blockchain.
How Ethereum Works
Blockchain and smart contracts
Ethereum operates on a decentralized blockchain, not controlled by any individual or organization. Transaction data and smart contracts are stored on thousands of nodes (computers) around the world, ensuring security and transparency.
The core difference between Ethereum and Bitcoin are smart contracts. These are automated programs that run on the blockchain, executing pre-programmed terms without the need for a middleman.
For example, a smart contract could automatically disburse a payment when a job is completed as agreed without requiring bank confirmation.
Consensus mechanism
Previously, Ethereum used a Proof of Work (PoW) mechanism similar to Bitcoin, requiring miners to solve complex math problems to confirm transactions. However, in September 2022, Ethereum switched to Proof of Stake (PoS) with the Ethereum 2.0 upgrade.
- Proof of Work (PoW): Requires high energy, slow processing speed, high transaction costs (gas fees).
- Proof of Stake (PoS): ETH holders can stake (lock) a certain amount of ETH to confirm transactions and receive rewards. This mechanism helps reduce energy consumption, increase transaction processing speed and reduce gas fees, improving Ethereum network performance.
Thanks to the improvements of Ethereum 2.0, the blockchain is becoming more efficient, sustainable, and scalable.
How Ethereum Works
1 ETH = VND, how does the value of Ethereum change?
The price of Ethereum (ETH) is not fixed but fluctuates over time, depending on market supply and demand and many other economic factors. The conversion of 1 ETH to VND changes according to the exchange rate at each time, affected by the following factors:
Factors affecting ETH price
- Supply and demand: When there is high demand for ETH, especially in DeFi (decentralized finance) applications, NFTs, or smart contracts, the price of ETH tends to increase. Conversely, if many investors sell, the price of ETH may decrease.
- Network Updates: Major upgrades like Ethereum 2.0 help reduce transaction fees, increase processing efficiency, attract more users, thereby positively affecting ETH price.
- Global economic situation: When traditional financial markets are unstable or inflation increases, investors often turn to digital assets like ETH to hedge against risks. This increases demand and pushes ETH prices up.
- Widespread adoption: Large institutions adopting Ethereum as a payment method or using the Ethereum blockchain in financial and technological fields could also drive ETH prices up.
Check ETH rates in real time
Ethereum prices can change every minute, so to know how much VND 1 ETH =, you can track it directly on cryptocurrency trading platforms such as: LiveTrade Pro, Binance, CoinMarketCap,…
These exchanges display ETH prices in real-time, giving investors accurate updates before making a trade.
Factors affecting ETH price
Ethereum Wallet – How to Store ETH Safely
When owning Ethereum, choosing the right wallet helps protect your assets from loss or attack. There are two common types of wallets: hot wallets and cold wallets.
Hot Wallet – Convenient but needs high security
Hot wallets are always connected to the Internet, making transactions faster but more vulnerable to attacks. Some popular wallets such as MetaMask, Trust Wallet, Coinbase Wallet all support convenient transactions, but need to enable two-factor authentication (2FA) and protect seed phrases to avoid risks.
Cold Wallet – Safe Solution for Long-Term Investment
Cold wallets are not connected to the Internet, providing maximum security. The Ledger Nano X and Trezor Model T are two popular hardware wallets, while paper wallets store private keys on paper to prevent hacking. The downside of cold wallets is that they are not convenient for frequent transactions.
Which wallet should I choose?
If you trade frequently, a hot wallet is more convenient. For long-term investors, a cold wallet is a safe choice. Combining the two balances security and utility, ensuring that your ETH is always best protected.
Real-world Applications of Ethereum
Ethereum is not just a cryptocurrency but also a platform for many important applications:
Decentralized Finance (DeFi)
DeFi is a financial system without intermediaries, allowing users to:
- Borrow and lend directly with ETH.
- Participate in staking to earn profit.
- Trade on decentralized exchanges (DEX) like Uniswap, SushiSwap.
NFT (Non-Fungible Token)
Ethereum is the leading platform supporting NFTs – digital assets that represent ownership of art, music, games and more. Platforms like OpenSea or Rarible mainly use Ethereum as a means of payment.
Blockchain gaming ecosystem
Ethereum is the main platform for many NFT games like Axie Infinity, Decentraland, The Sandbox, allowing players to own in-game items and trade them using ETH.
Smart Contracts in Business
Many companies are using Ethereum smart contracts to automate business processes, reduce costs, and increase productivity.
Real-world Applications of Ethereum
Is Ethereum a Good Investment?
Ethereum is one of the most popular digital assets on the market. Cryptocurrency Market. As the leading blockchain platform for smart contracts and decentralized applications (DApps), ETH is highly regarded by many investors. However, like any investment, Ethereum has its advantages and risks to consider.
Advantages of Investing in Ethereum
- Pioneering technology: Ethereum is not just a cryptocurrency but also a vital platform for thousands of blockchain projects, from decentralized finance (DeFi) to NFTs.
- High liquidity: ETH is widely traded on most major exchanges such as Binance, Coinbase, Kraken, making it easy for investors to buy and sell.
- Growth Potential: The Ethereum 2.0 upgrade and transition from Proof of Work (PoW) to Proof of Stake (PoS) increases efficiency, reduces gas fees, and consumes less energy. This could boost the long-term growth of Ethereum.
- Institutional Interest: More and more large investment funds and traditional financial firms are interested in ETH, helping to increase the stability and value of this asset.
The Risks of Investing in Ethereum
- Strong price fluctuations: ETH can increase or decrease by tens of percent in a short period of time, posing great risks to investors.
- Competition from other blockchains: While Ethereum is leading, platforms like Solana, Avalanche, and Cardano are also growing strongly, creating competitive pressure.
- Transaction Fee Issue: While Ethereum 2.0 has reduced gas fees, transaction costs can still be high at times when the network is overloaded.
Is Ethereum Right for You?
If you are a long-term investor, believe in the development of blockchain technology and are comfortable with price fluctuations, Ethereum can be a potential investment. However, if you are looking for stability and low risk, you should consider carefully before investing in ETH. A reasonable strategy is to diversify your investment portfolio to minimize the risk of large fluctuations in the cryptocurrency market.
Ethereum is not just a cryptocurrency but also an important blockchain platform that supports many real-world applications. From decentralized finance, NFTs, blockchain games to enterprise smart contracts, Ethereum is gradually changing the way we interact with technology.
If you want to learn more about What is Ethereum and stay updated with the latest news on the cryptocurrency market, stay tuned LiveTrade Pro to grasp investment opportunities and development trends of blockchain technology!
