Ethereum

Frequently Asked Questions

What is Ethereum?

Like Bitcoin, Ethereum is based on blockchain technology, but Ethereum offers much more possibilities than a simple cryptocurrency. For example, the Ethereum blockchain is used primarily as a distributed computing network for the management of so-called Smart Contracts.

The Ethereum network uses the Ether (ETH) cryptocurrency as a means of payment for all types of operations performed on the blockchain. Although Ether is not designed as an external method of payment, it can be used for payments just like Bitcoin.

What are Smart Contracts?

Smart contracts consist of a set of instructions written in the "solidity" programming language. These are digital contracts managed by the Ethereum blockchain, which can be signed by one or more people. In principle, almost infinite applications are conceivable. So far, this technique is mainly used in conjunction with ERC-20 tokens.

Ethereum Tokens

There are two types of cryptocurrencies: coins and tokens. Coins are independent cryptocurrencies with their own blockchain. Tokens such as the Ethereum-based ERC-20 tokens use a parent blockchain (here the Ethereum blockchain).

Over the last few years, thousands of Ethereum-based tokens have been created through smart contract technology. Many of these tokens can be traded on external exchange platforms. EOS, currently the most popular Ethereum token, has the fifth largest market capitalization of all cryptocurrencies. The EOS developers are currently decoupling the currency from Ethereum by creating their own blockchain. This shows that it is possible to turn a token into a coin.

Ethereum Wallets

To receive Ether and Ethereum-based tokens, you need an Ethereum wallet. There are various options available.

MyEtherWallet

The website MyEtherWallet.com is very popular and is often used to create an Ethereum wallet. By means of this page it is possible to create an Ethereum wallet easily and without downloading software. It is not an Online Wallet. Please note the safety instructions on the page.

Mist Ethereum Wallet

You can also download and install the official Ethereum client instead. However, this has the disadvantage that the entire Ethereum blockchain has to be downloaded and updated. That's about 50 GB of data if you install the software for the first time.

Online Wallets

Many Ethereum users store their Ether on an external website. However, this has some serious disadvantages. In this case, the respective page is responsible for the security of your Ether balance. Furthermore, newly created Ethereum tokens are sometimes given to Ether holders. However, you usually only get these gifts if you have your own Ethereum wallet. For these reasons, we advise against using such online services to store cryptocurrencies.

Where to buy Ethereum?

Ether is traded on various trading platforms called exchanges such as CEX.IO. As on the stock exchange, the offered and requested prices result in a current trading price. Alternatively, you can buy Ethereum directly from other users via the website localethereum.com.