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About Ethereum

Admittedly, there have been so many mind-blowing technological advancements even in just the past few years, that it is difficult for anyone, even the most tech-savvy, to keep up with them all. But one of the newer advancements that you absolutely need to pay heed to is Ethereum.

Most of you have probably heard of it but not everyone has fully understood it. It’s not the easiest thing to grasp, partially because it is so new and unlike anything before it, but it is certainly worth your time to learn.

In some ways, it goes hand-in-hand with the upswing of cryptocurrencies, but in other ways, it is completely its own thing and much more than a currency.

What Is Ethereum?

Ethereum is an open-source platform that allows the creation of decentralized applications, or DApps. Like cryptocurrencies, it relies on blockchain to enable the platform to be open-sourced and free from a managing person or entity.

A blockchain is basically a group of independent users, often referred to as “nodes,” who work together to maintain all of the applications and data that are stored on the blockchain, which is public.

Most platforms, like LinkedIn, Facebook, or Amazon, rely on a corporation or person who owns the platform and servers, which contain all your personal information. The party is responsible for keeping the platform running and your information safe.

The concept of Ethereum removes this party from the equation. Essentially, the client-server model, which nearly all websites and web applications run off of, is done away with. This revolutionizes the internet as we have known it, and some even say it democratizes it.

This makes sense, since, through blockchain technology, users across the globe (“nodes”) become responsible for maintaining the platform themselves.

In addition to enabling the creation of decentralized applications, the Ethereum blockchain also allows for executing and maintaining smart contracts based on prewritten code.

So, overall, while cryptocurrency such as Bitcoin enables you to participate in a decentralized, global financial network, Ethereum allows you to interact in a decentralized, global computational network – it is a “world computer.” Along with it comes the ability to participate in the financial network through smart contracts and Ether, the digital currency that operates the contracts.

What Are Smart Contracts?

Smart contracts are scripts of code used to execute a wide variety of applications. These pieces of code require a trigger to initiate them, and once triggered, the application is carried out without the ability of third parties to interfere, change or reverse it.

Pretty much any type of contract that is normally controlled and/or executed via computer code can be done through smart contracts: real estate transactions, exchange of financial tools such as equities, voting, global supply chain transactions, even medical records, and numerous other applications.

Smart contracts are still incredibly new, and the full extent of their potential application is not fully known.

The operation of these smart contracts is the primary purpose of Ethereum, more so than its use as currency. While Ethereum (Ether) can be bought and traded similarly to Bitcoin, its tokens are what enable the triggering of the smart contracts.

So again, Ethereum and smart contracts are so much bigger than just a decentralized, digital currency.

History of Ethereum

Unlike Bitcoin, whose creator(s) remain(s) unknown, we do know the mastermind behind Ethereum.

Its creator, Vitalik Buterin, was just a teenager when Bitcoin first came on the scene. But even then, he was intrigued, and by a mere 19 years of age, he was already explaining his ideas about a decentralized computational network that would become Ethereum.

By 2014, Vitalik earned the Peter Thiel Fellowship – a $100,000 fellowship that enabled him to pursue his vision for Ethereum to the full, and thus the decentralized, blockchain-based network was born.

In a relatively brief period of time, it has gained public attention. Many are speculating that Ethereum not only has the potential to catch on globally but that it will actually utterly disrupt and revolutionize how the internet and world operate.

Predictions include some pretty extravagant claims that the current internet super-powers (whose power has expanded well beyond the internet as a result), will be thrown down, and the masses will gain the advantage and power that only a few internet elites have had so far. Certainly, revolutionary rhetoric if ever there was any.

But whether or not it will grow to such fantastic proportions, we cannot really know. What we do know is that Ethereum’s cryptocurrency, Ether, is already sitting at a little over $300 a unit. It certainly seems to be rising up the ladder.

Pros & Cons of Ethereum

As with any new technologies, cryptocurrencies, and trends, before making any investments and taking any chances, you need to fully understand the pros and cons so that you can make the best choices possible.

So, here is a quick breakdown of the pros and cons:

Pros:

• The ability to run applications and form contracts without a third party.

• Changes are nearly impossible to make, which ensures your smart contracts are very secure and difficult to tamper with.

• Ether, its cryptocurrency, will always be necessary to run code on Ethereum, giving it a more stable long-term value than other cryptocurrencies.

• It is gaining popularity and value quickly at the moment.

Cons:

• While decentralized and harder to tamper with, the application and smart contract coding is still written by error-prone humans.

• If you end up with a code with an error, it is near impossible to fix because of the decentralized nature.

• Ether is tied to the success, or failure, of Ethereum, so investing in it is still extremely risky.

• The future and popularity of Ethereum are by no means secure; the project as a whole could be replaced by improved blockchain projects.

• There will never be a cap on Ether supply (which some may see as a benefit), unlike Bitcoin, which will be capped at 21 million tokens.

• Ethereum’s value spikes and plummets extremely in the market from day to day – it is a volatile market investment.

Why Invest in Ethereum?

Ethereum is certainly a revolutionary concept and has the potential, if successful, to seriously impact global operations as we know them. It is also currently seeing a serious rise in popularity.

With these two facts together, investing in Ethereum is an exciting possibility full of potential. But, as noted above, its future and the future of its cryptocurrency are still very uncertain (and there are a lot of coins you can invest in, like Bitcoin, Litecoin, NEO, Ripple, etc). While a lot of money could be made with smart, patient investment choices, a lot of money could be lost through rash investment or through the ultimate failure of the project.

Keep your eye on Ethereum and how it does on the market, be patient and wise. Just remember not to put all of your eggs in one basket!

Buying Ethereum Using Different Payment Methods

Bank Transfer

Bank transfers are one of the popular ways of buying Ethereum, available on every Canadian cryptocurrency exchange. For Canadian traders, we recommend checking out native platforms like Bitbuy, Coinberry, and NDAX.

All you need to do is create an account, complete the verification process, access your new account, and link it to your bank account. Regular bank wire transfers take 1-2 business days.

On Bitbuy, there’s a 0.50% fee and a minimum $20,000 deposit limit. This might discourage some traders but they can always use Coinberry and NDAX instead which have low fees and don’t apply any deposit limits.

For faster transfers, you can make an Interac e-Transfer if your bank supports this service. These trades typically take 1-4 hours and incur a 1.50% fee.

Credit Card and Debit Card

Card payments are probably the most convenient payment method for most crypto traders. If you want to purchase Ethereum via credit or debit card, the best platform to use is Coinberry.

The best thing about this platform is that all deposits are free regardless of the payment method you’re using. However, there’s a $500 limit per transaction on card deposits and you have to use Visa or MasterCard for your purchases.

For larger deposits, you can use BitPanda or Coinmama. The latter has a $5,000 daily limit and a $20,000 monthly limit and incurs a 5.00% transaction fee per trade. The reason behind this high fee is that Coinmama locks the price of the coins at the moment you decide to place the order.

OTC

If you want to purchase a large amount of Ethereum, i.e. over $100,000 worth of ETH, you should look for a proper OTC desk.

Compared to regular crypto exchanges, OTC desks allow you to place large orders under the radar, without disrupting the market, as they’re typically decentralized and non-custodial. They also provide the desired level of liquidity and fixed rates to avoid slippage.

Some popular OTC desks include Circle, ItBit, and Genesis. Moreover, high trading volume exchanges like Kraken and Binance have their own OTC desks. This way you don’t need to create a second account on a different platform.

PayPal

PayPal is widely used as a payment method in Canada which is why a lot of Canadians would be interested in using their PayPal balance for crypto trading. However, due to the high risk of chargeback fraud, only a few crypto exchanges support this method.

Usually, these are peer to peer exchanges where the buyers and sellers are themselves responsible for executing the trades and agreeing on how to settle the payment. Quebex is one such reliable Canadian P2P exchange.

How to Store Your Ethereum/ Best Ethereum Wallets

When it comes to cryptocurrencies, you’re probably aware that digital wallets don’t store the actual coins but the private key instead, i.e. an encrypted wallet address that holds the key to your Ethereum balance.

Digital wallets can be cloud-based, such as the extremely popular MyEtherWallet, an open-source interface best used as temporary storage. With this wallet, you can download the private key to your computer or mobile phone, or integrate it with popular hardware wallets like Trezor and Ledger Nano.

Hardware wallets keep the key offline and reduce the possibility of outsiders gaining access to your balance. If you somehow manage to lose the wallet, you can get your coins back using the recovery phrase.

Frequently Asked Questions