Crypto currencies are more and more talked about and some are even announcing the complete disappearance of traditional currency sooner or later. There are several types and all of them are based on blockchain technology. Like its ancestor Bitcoin, Etherum is a unit of value that does not rely on any centralized control system. Here we show you how Ethereum works and what to do to buy it.
How does Ethereum work?
It is a blockchain protocol invented by Vitalik Buterin. This technology makes it possible to store and transmit billions of information in a transparent, secure manner and without a central control body. Launched in 2015, Ethereum is now the second cryptocurrency behind Bitcoin, but it is more complex.
While Bitcoin is only intended to enable payments, Ethereum is used to develop complex applications in industries such as finance, entertainment, the cloud and real estate. It is also used to create what are called Smart Contracts whose terms are tamper-proof and non-modifiable using blockchain technology. When the conditions of the contract are met, an asset transfer then takes place automatically and in a completely secure manner.
Here is an example: a contract providing that if a train is at least 1 hour late, the transport company will automatically reimburse 30% of the ticket thanks to the smart contract to which the passenger will have signed up when purchasing his ticket.
How to buy Ethereum?
Investing in cryptocurrency is considered risky because its price is very volatile with large and rapid fluctuations. First of all Ethereum purchaseSo be aware of this risk and never invest more than what you can afford to lose.
To buy this cryptocurrency, it is necessary to open an account on a website specializing in the exchange of these units of value. Payment is generally made by credit card or bank transfer. There are relatively few specialized brokers in France, but it is still possible to buy on foreign platforms. Commissions will vary from one provider to another.
Ethereum is kept with the broker from whom the purchase was made or in an electronic wallet which can itself be physical or dematerialized. The advantage of this system is to avoid hacks of the site responsible for keeping them.
Dematerialization consists on the one hand of a public key accessible to all (a series of codes corresponding to an Ethereum address) and on the other hand of a private key known only to the owner. The physical key is similar to a USB key.
Finally, you will find that all Ethereum shopping sites carry a warning on the volatility and the high level of risk of the investment with a standard phrase generally worded as follows “75% retail investor accounts lose money when trading CFDs with this provider. You should ask yourself if you can afford to take the high risk of losing your money.”