Buy Ethereum UK (ETH Buying Guide)

What is Ethereum?

Although cryptocurrency awareness around the world is on the rise, this mostly applies to Bitcoin, the world’s first digital coin. As far as other cryptos are concerned, the knowledge that people have in terms of how many coins are there and what’s their purpose is disappointingly scant.

This can also be said of Ethereum, an innovative cryptocurrency and blockchain-based network whose full potential we are yet to benefit from.

Ethereum was created by the young genius Vitalik Buterin, Russian-Canadian software engineer who was barely 21 years old when he launched his programmable blockchain and digital coin in 2015.

What Buterin had in mind was designing an open-source blockchain which would show how we can leverage blockchain technology for so much more than just online payments. This means that Ethereum wasn’t created as a direct opponent to Bitcoin, another digital coin hoping to take over the crypto market.

Ethereum’s native currency, Ether (ETH), is used both as a store of value and as collateral in blockchain-based applications. The supply of ETH and the network itself isn’t controlled by any central authority. Rather, users can build their own smart contracts, digital coins, and decentralized applications (dApps) in a trustless environment.

This means that instead of creating an application the traditional way, i.e. putting someone in charge of the operations and allowing them to control all the data, the dApps replace this client-server relationship model. dApps are run on the Ethereum network, with their data stored on the digital ledger safeguarded with a Proof of Work mechanism.

Smart Contracts

A smart contract is a computer protocol that enforces a contract and makes sure the predetermined conditions are respected by the involved parties. It’s like a regular contract but without the involvement of third parties. A smart contract is a self-executing computer code where trust is replaced with cryptography.

Contrary to what some of you might think, smart contracts are not a recent invention. Nor were they introduced by Vitalik Buterin when he designed Ethereum. Back in the late ‘90s, another cryptographer called Nick Szabo already coined the term and explained the whole concept in his article Formalizing and Securing Relationships on Public Networks. 

However, the lack of suitable technology had postponed the implementation of smart contracts until a few years ago when Ethereum introduced its Turing-complete language called Solidity. It’s a programming language that supports the building of smart contracts.

Now, you can say goodbye to the extra paperwork and service costs for lawyers and notaries. All you need to do is agree with your partner to create a smart contract on Ethereum that both of you can access online without being able to alter anything. The contract itself will make sure you stick to your obligations, avoiding any kind of dodgy business.

Smart contracts hold the agreed value and only unlock it when all the conditions have been met. What makes them so desirable, apart from the lower costs and saving time, is the high-level security of the Ethereum blockchain. The only way for a hacker to meddle with your data or money is to overpower more than 50% of the whole Ethereum network. Generating such an amount of computing power is virtually impossible.

Who Created Ethereum?

Vitalik Buterin was born in Moscow, Russia, and emigrated to Canada with his family at the age of six. He developed his interest in technology early on, encouraged by his father who was a computer scientist himself. He shared with his son his enthusiasm for cryptography and Vitalik was instantly hooked.

He joined a number of bitcoin chat forums and was a pretty active member, engaging in all sorts of discussions. He started writing for well-known crypto magazines like Ledger and later on became its editor. He co-founded Bitcoin Magazine in 2011 and continued publishing there.

This helped him develop his vision for Ethereum and publish the system’s whitepaper in 2013. The next year, Vitalik won the Peter Theil fellowship and invested the award money, 100,000 US dollars, into making his dream come true. A year later, Ethereum was made available to the public.

In the course of the next five years, his digital coin Ether became one of the most popular digital coins worldwide, second only to Bitcoin. According to CoinMarketCap, 1 ETH is currently worth 169 USD.

Cons of Ethereum

We would like to take a moment and point out some minor disadvantages when using Ethereum.

As you might now, the network uses the proof of work (PoW) consensus mechanism to mine coins and verify transactions. This is the basis of the cryptographic proof that replaces trust in third parties that was necessary for traditional money transactions. This mechanism is also used by Bitcoin.

However, there has been a lot of criticism surrounding PoW because miners need to generate an enormous amount of computing power to complete the process. That’s why a lot of platforms, Ethereum being one of them, are planning to switch to the more efficient Proof of Stake method in the near future.

In the meantime, the gradual shift might slow down Ethereum’s network. Worst case scenario, it might overwhelm the system and cause a temporary breakdown. For now, it seems like Ethereum’s team does a great job managing the network.

The other disadvantage lies in the difficulty of Ethereum’s programming language, Solidity. Most developers are used to other universal programming languages ,so dealing with Solidity is quite a challenge.

Ride The Wave

From the looks of it, Ethereum’s blockchain will continue to grow and expand in the following years. The year 2019 already saw the rise of DeFi, or Decentralized Finance, the most valuable ecosystem within the Ethereum economy. In an age of financial system instability around the world, DeFi might be our best alternative.

We hope this article was useful for you and has motivated you to purchase Ethereum if you still haven’t. For those interested in other markets, you can check out our guides on how to buy Ethereum in Australia, how to buy Ethereum in Canada, or in the USA.