What is the Ethereum and how does it work?

What is the Ethereum and how does it work?

 

The idea of Ethereum was created at the end of 2013 by Vitalik Buterin, a a 19-year-old Russian-Canadian computer programmer. The platform, launched on July 30, 2015, has enjoyed a boom in popularity since March 2017, considered the most promising blockchain outside Bitcoin. Its creators speak of it as the "first true global computer", which makes it possible to build on its platform decentralized applications. becoming today the second largest cryptocurrency in circulation. The monetary part of Ethereum' is for the moment largely inspired by bitcoin ; but what makes this platform so interesting is  the smart contract concept.
Ethereum network participants do not just validate monetary transactions: they execute code from decentralized applications, called "Dapps". This code allows in particular the implementation of smart contracts, which constitute the heart of Ethereum's potential.
Ethereum works with a cryptocurrency, ether, which has a specific function: pay the execution of smart contracts, whose operation can consume significant resources. The ether is therefore used to buy "gas" (gasoline) to make these contracts work; if you run out of gas, the contract stops.
"The Bitcoin blockchain has been designed specifically for monetary applications, while Ethereum can create any type of application," says Ethereum founder Vitalik Buterin.
The motto of the Ethereum platform is called "ether". In principle, it is not supposed to be a bitcoin-like currency in its use, but simply a financial intermediary necessary for the operation of smart contracts.
In addition to the ether, there is another unit called "gas" which is used to fuel the mining activities, and more specifically to pay the transaction costs. Each calculation operation has a defined gas cost: for example, a SHA3 hash costs 20 gases, and any transaction costs a minimum of 500 gases. There is therefore a gas market, depending on the prices that Ethereum users want to pay and the ones the miners want to accept. The Etherscan site gives graphs of the price of gas; it typically runs around 23 billion wei per unit, or 23 billionths of aether, or 100 million gases per dollar.
In three years of existence, Ethereum has already managed to split into two competing projects with two different currencies: ETH (Ethereum) and ETC (Ethereum Classic), the first being ten times more widespread than the second.
Choosing the right equipment
You will not be able to mine Ethereum in good conditions if you do not have the right equipment. You still need a fairly powerful computer, with a powerful and recent graphics card, and a video memory of at least 3 GB.
However, you will need to equip several software. You will need an online wallet that will allow you to receive and store your cryptocurrency. But you must also have a mining software. Currently, the best software for mining Ethereum is Claymore Dual Miner.
Calculate profitability
You have to calculate if mining Ethereum gives you enough money to make it profitable. You have to earn more money than you invest. The expenses incurred by Ethereum's mining are the purchase of equipment and your electricity consumption. In addition, the revenues generated by Ethereum depend mainly on two factors:
     the difficulty of mining is an important factor since the higher the level of mining, the less ethers you will get. As a general rule, the more miners on the market, the higher the difficulty level of mining;
     the value of Ethereum is also an important factor. While it may not be possible to accurately forecast the evolution of Ethereum's value, you still need to anticipate it and keep a margin of safety so that a sudden drop is not too severe. Choose how to work
You must define how to work. If you work alone, it will be more difficult to make money and you will take more time to generate your first earnings. However, you will keep the entire Ethereum that you mine. Otherwise, you can register on a mining pool. This is an option that will allow you to pool efforts, but also the gains. That is, you will miner more ethers, but the gains will be shared among the different contributors in the pool. In addition, mining pools generally take a fee of 1% to 10% of earnings.