About a decade ago, not many people knew what a blockchain network was. Now, with many of these platforms existing as open-source software that solve a myriad of real-life problems, the question no longer is “what is a blockchain platform?” rather, “what can I achieve on a blockchain network?” Here is a look at Ethereum, the world’s second blockchain network which is also the most elaborate programmable blockchain in existence.
What is Ethereum?
Ethereum, simply put, is an open source software network hedged on the blockchain, and providing room for developers to create and deploy decentralized applications (dApps). It is similar to Bitcoin in that is a decentralized blockchain system.
Whereas Bitcoin only serves the purpose of financial transactions as a peer-to-peer cash system facilitating Bitcoin payments, Ethereum has elaborate capabilities that include providing a platform for running the code that programmers use to create decentralized applications. In short, Ethereum is the largest programmable blockchain.
It was launched in 2015 by Russian-Canadian math prodigy Vitalik Buterin.
Overview of the Ethereum Blockchain
Compared to other blockchain networks, Ethereum stands out! This is so because of the many elaborate aspects of the network. The most outstanding of these, however, is its virtual machine, also known by the acronym EVM.
The Ethereum Virtual Machine is an automata or a Turing-complete software through which an individual using the Ethereum platform can deploy a decentralized application. Importantly, such deployment can be undertaken in whatever computer language.
Ether (ETH) is the crypto token that powers the Ethereum network. Application developers use the token to pay for services and transaction fees on the network. Besides, it also is a tradeable cryptocurrency.
Applications of Ethereum (Use Cases)
The programmable nature of Ethereum means that it is more versatile compared to Bitcoin, or even other blockchain networks, for that matter. You can use the platform to decentralize any centralized service.
Think of any of the myriad intermediary services like loans offered by banks, insurance registries, regulatory compliances, voting systems, among others. All these can be decentralized on the Ethereum platform.
Besides, the network can provide room for building Decentralized Autonomous Organizations (DAO). It also offers a platform for launching other cryptocurrencies. The ERC20, the protocol standard for releasing tokens on the Ethereum platform has been used by many startups to issue tokens and raise billions of dollars via Initial Coin Offerings (ICO).
Recently, the platform added a new standard, ERC721, which is a token that tracks unique digital assets. The practical use case for this token is digital collectibles; the overnight hit game CryptoKitties, where players collect and breed cats is one such application.
How Do You Buy, Sell or Store Ethereum?
People that are new to the cryptocurrency space will find the whole idea of buying and storing Ethereum a little disconcerting. However, once you are sure you want to hold some coins, here is how to go about it.
If you are using fiat such as USD, GBP or EUR, then you need a bank account that can facilitate international transfers. Alternatively, you can use a credit or debit card. When using any of these two payment methods, the following steps should help you get some ETH in your wallet:
1. Create an account in any of the cryptocurrency exchanges that accept fiat.
2. Verify your identity.
3. Add a payment method.
4 You are now ready to transact by simply following the prompts on the exchange.
If you already have Bitcoin, then the whole process of buying Ethereum is easier because people that have Bitcoin must have completed the process of verifying identity.
If you have Ether, chances are that you bought them on an exchange. Or, you may have accumulated some as earnings from your mining activities. Whatever the case may be, when you want to sell the said ETH, then follow the steps below:
1. Register for an account on a cryptocurrency exchange that has Ethereum on the list of tradeable coins. A good example is Coinbase.
2. Log into the said account. For the safety of your coins, always enable the 2-factor authentication on the exchange.
3. Transfer ETH into your account.
4. Proceed to the ETH wallet on your account in the exchange and select the “sell” tab.
5. Key in the amount you wish to dispose of.
6. Review the transaction details and confirm the sale by clicking on “sell.”
How Do I Keep my Ethereum Secure and Anonymous?
Ethereum is similar to Bitcoin because it also is pseudonymous. All the transactions you make are recorded on a distributed, public, and immutable ledger. The nature of this arrangement is not a serious issue. However, the reasons for your transaction and your privacy demands will dictate the level of privacy you require.
When transacting using cryptocurrencies, it is important to note that privacy is never binary; instead, it covers the entire continuous spectrum from completely private to fully public.
With the above fact in mind, there are four basic ways of keeping your ETH secure, anonymous and even private. These are through the use of secure wallets, via password clouds, by conducting anonymous transactions and through the use of a crypto tumbler.
Secure Ethereum Wallets
There is a whole list of secure cryptocurrency wallets that can keep your ETH safe. These include desktop, mobile, hardware, as well as paper wallets. More information about cryptocurrency wallets for novices is available here.
Some of these that are outstanding include:
Built by SatoshiLabs, this is the world’s first secure and legitimate Bitcoin wallet. Trezor One works with Android devices as well as apps such as Multibit HD, Trezor Wallet, and Mycelium. Because it creates an offline transaction signing environment, it is safe and reduces the risk of a third-party recovering your private key even where your PC gets a malware attack. Each of these wallets has a PIN code which never leaves the device, and the entire PIN code system is innate, meaning not even brute force can compromise the wallet’s safety.
This hardware wallet gives users the ability to store their private keys in a secure physical device. It has an operating system called BOLOS which is securely integrated into the cryptocurrency wallets. The crypto stores on the wallet are all offline. This feature enhances the security of the coins since it makes the wallets tamper-proof.
Aside from serving ETH and other ERC20 coins, using Metamask allows you to interact with other Ethereum dApps as well. The beauty of using Metamask is that you can access the wallet and interact with the dApps easily by adding the function as a Firefox add-on or Google Chrome extension.
This relatively new desktop wallet is extremely intuitive, easy to use and boasts of very advanced features. Any beginner with the requisite tools can complete a transaction. The wallet supports Mac OS, Windows, and Linux, and has an app compatible with iOS and Android. Though it does not support all the coins listed, it comes with an inbuilt shapeshift exchange that allows users to trade Bitcoin for other altcoins and vice-versa, right inside the wallet.
Styled as MyEtherWallet or MEW, this infrastructure is a paper wallet that saves your ETH via an offline cold storage mechanism. When using MyEtherWallet, you have to print both the private and public keys and keep these in a safe place. These keys often are in the form of QR codes, which you then have to scan when you want to transact. MEW is safe because it hands the user full control. You do not have to worry about any hardware, hackers, or malware, for that matter. All you are tasked with is taking care of the piece of paper where you have printed the QR codes.
This narrative should have started with this wallet because it is the official storage software developed by the team behind Ethereum. The reason it does not rank so high among the recommended Ethereum wallets even though it great for smart contracts deployment is because it is a full node facility. This simply means that to use it, you have to first download and install the entire Ethereum blockchain, which is now larger than 1 TB.
Internet security is a delicate topic because of the ease with which wealth, data, and resources can be pilfered online. When operating in the blockchain realm, as such, using cryptocurrency tumblers to obscure your ETH transactions alone is not enough to keep your deals private. You need to go over and above the norm. That is where password clouds come in.
The various password managers available in the market such as LastPass provide users with two-factor authentication, a secure password generator, and a master password. The combination of these features lend you convenience. You can log into your accounts easily from a recognized device yet keep the same accounts safe from intrusion.
Some of the recommended password managers in the market are Dashlane, LastPass, and iPassword.
As mentioned earlier in the text, ETH is pseudonymous; meaning, all transactions are available in a public log or ledger where they can be scrutinized. If you want to make your transactions private, then you have to conceal each of the payments you make from or receive into your ETH wallet.
There are several ways of attempting anonymous transactions. Creating many addresses and subdividing your ETH into each of these new wallets is an option. This approach implies that you always operate from a fresh wallet every time you do a transaction. You can also opt for a crypto tumbler, which is the most preferred method.
This text will provide insights on how to mix cryptocurrency using SmartMixer. Though ETH is not currently on the list of cryptocurrencies whose transactions that this coin tumbler conceals, the coin shall soon be available. Moreover, the process of mixing cryptocurrencies on this crypto mixer is standard, meaning that the method is the same for all cryptocurrencies.
The crypto mixers available online mix coins using two main methods; consigning the coins into a pool full of other coins, then sending them out to the fresh crypto wallets that the client has provided, or using CoinJoin. The latter is a trustless method that brings together multiple cryptocurrency transactions from various users into one with the aim of making it difficult to put the various transactions apart.
SmartMixer applies the first method. Depending on the preferences of a client, this service, which easily is the best crypto mixer available online, will put the coins you submit into any of its three pools before sending untraceable coins into the new address you have provided. The pools mentioned vary in terms of the source of the coins they contain.
The beauty of using SmartMixer is that the platform does not require that you sign up, and neither does it keep the logs of your transaction for longer than is necessary. Besides, users that prefer even more anonymity can use it in conjunction with the Tor browser. The SmartMixer interface is easy to use; it is possible for a complete newbie to use the crypto tumbler to mix coins successfully following the simple step-by-step instructions on the platform.
The Ethereum blockchain holds a lot of promise. For this reason, ETH will remain a dominant cryptocurrency for a long time to come. As the platform advances, more use cases may emerge. Cryptocurrency enthusiasts, as such, will look to hold more ETH. Using the coin online securely, however, means that you prioritize the use of the various crypto tumblers available.