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Ethereum Guide For Beginners – What & How Of The Token!

Being an investor, anybody needs clarification about choosing between the two most popular cryptocurrencies, Bitcoin and Ethereum. Besides, we often find beginners questioning Ethereum’s place in crypto, considering how often BTC and ETH are ruling the news headlines. 

However, it’s unfair to consider Ethereum a direct competition to Bitcoin. Both the tokens are unique, and before you think of adding the token to your portfolio, it’s important to its core basics. 

Keeping the same in mind, our experts at Blockchain Gossips have come up with a unique beginner-only approach to investing in Ethereum. In the following sections, let’s examine the token, its history, and the unique fundamentals that add to its value. 

Ethereum: History Behind The Token

In a nutshell, Ethereum is a decentralized global software platform powered by the possibilities of Blockchain technology. As a network, Ethereum is designed to be a secure, programable, and scalable platform that simplifies operations over the network. 

Anyone can use the network to create secure digital technology using its native Ether (ETH) token. But, interestingly, that’s not all! Users can also utilize ETH to pay for tangible goods and services. 

Interestingly, Ethereum wasn’t always the second-largest token in the market. The project was developed as a solution to the scalability problems associated with the Blockchain network. However, it wasn’t until ETH proposed a DAO that the network was open to dApps. 

Fast forward to 2023, Ethereum is the Blockchain of choice for organizations and developers to create dApps (Decentralized Applications). So now that we know the history behind the token, let’s understand how the network works. 

How Does The Token Work?

Like BTC, Ethereum also runs on a complex system architecture managed by thousands of computers spread across the globe. However, every user tapping into the network becomes a “node” rather than a single central server. As a result, this network becomes decentralized, safer to security threats, and secure transactions. Moreover, it makes little difference if one computer fails because the network can function without hundreds of others.

Ethereum is a single decentralized infrastructure powering the EVM (Ethereum Virtual Machine). Here, individual users or nodes have a copy of the computer, making it essential for users to confirm transactions among themselves before they make any further copies. Think of the network as a long chain of blocks where each newly formed block is generated as fresh data adds information to the existing block. 

ETH 2.0: The Merge Discussed In Detail

The crypto industry is anything but dormant. On the contrary, numerous developments are unfolding regularly and shaping the industry. As traders and investors, you must keep up with these developments and shape your investment decisions accordingly. 

The ETH Merge

If you are someone who keeps up with the developments in the crypto industry, it is unlikely to presume you might have missed the news about “the Merge.” There has been a lot of hype about this development for years, but Ethereum finally went forward with the Merge on 15th September 2022. 

Simply put, the Merge is Ethereum’s shift from the PoW (Proof-of-Work) to the PoS (Proof-of-Stake) consensus mechanism. This means Ethereum will no longer rely on miners to validate transactions in the blockchain. Instead, the transactions on the blockchain will be verified by people’s stake in the network.       

ETH 2.0: Why Is The Project Important?

This is one of the most significant developments in the crypto industry, which has both good and bad sides based on where you are standing. On the plus side, this transformation has played a key role in bringing Ethereum’s energy consumption by about 99%. 

On the supposed downside, many miners are now out of jobs since the blockchain does not rely on huge computing potential to validate transactions. On the other hand, this transformation will also allow the blockchain to benefit from more efficiency and scalability.

This certainly impacted the token’s performance, as most people anticipated that things would improve. But following the hype, Ethereum prices began to plummet again for different reasons. 

Besides the impact of the Merge, Ethereum has also succumbed to adverse developments in the industry in recent times. With the collapse of FTX in November, government authorities are now working on strengthening crypto regulations which are always bad news for the industry. This has left many wondering if Ethereum will be able to recover in the future or not.    

This wraps up our idea on all the basics and latest details on the Ethereum Blockchain. So now that we finally have an idea of the recent events, let’s look at the most common comparison of ETH Vs. BTC is a matter of conflict in the mind of investors. 

ETH Vs. BTC: Know The Difference

Bitcoin (BTC)

Although Bitcoin stands out as the #1 token in the industry, Ethereum isn’t much behind. The BTC network has developed itself as a go-to option for transactions with complete security and seamless speed. In addition, the hard ceiling of 21 million coins adds to the token’s overall value.

However, Bitcoin suffers a major drawback due to its PoW network consensus, making it hard for the token to expand. In addition, there’s not much utility that backs the token. 

Ethereum (ETH)

Ethereum is a revolutionary project that aims to replace the present internet infrastructure. The project isn’t only a means of transaction but also a network that allows developers to code new projects using the chain. 

Additionally, ETH has great utility for its interoperability with dApps. Developers using the Ethereum platform can easily create apps in the decentralized environment, making it a network for all tokens developed under the ERC-20 consensus. Most importantly, ETH’s recent switch from a PoW to a PoS mechanism gives it an edge over BTC. 

While BTC is the market leader, ETH is a token backed by strong utility and fundamentals. 

Final Thoughts: Is Ethereum a Good Investment?

Investing in cryptocurrencies will always come with certain risk factors. Traders and investors need to weigh these risk factors and decide accordingly.

That said, ETH is one of those few tokens that will likely perform well in the long term and is less likely to succumb to most risk factors. But it would help if you did your due diligence and researched market trends before making concrete decisions.  

So, are you ETH-positive in the long run?

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