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What is Ethereum?

Learn about the Ethereum network in Best Wallet.

Updated over a week ago

Ethereum is one of the largest and most important networks in crypto, and its native token Ether ($ETH) is the second largest cryptocurrency by market capitalisation. But what exactly is it?

The Ethereum network is a decentralised blockchain platform launched in 2015 by Vitalik Buterin and a team of other co-founders. Unlike its predecessor, Bitcoin ($BTC), which was primarily created as a digital alternative to traditional currencies, Ethereum was designed to be much more. It introduced the concept of smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. This allows developers to create decentralised applications (dApps) on the Ethereum blockchain.

Ethereum's main distinction lies in its ability to support these dApps and smart contracts, which have applications ranging from finance to gaming and beyond. This has established the network as a leading platform for various innovations, including decentralised finance (DeFi) and non-fungible tokens (NFTs).

How does Ethereum work?

Ethereum operates on a consensus mechanism called Proof of Work (PoW), although it's in the process of transitioning to Proof of Stake (PoS) with its Ethereum 2.0 upgrade. Consensus models are just how a blockchain/crypto network works.

In its PoW model, miners are used to solve complex mathematical problems to validate transactions and create new blocks on the blockchain. This process, while secure, was quite energy-intensive and led to concerns over its environmental impact.

Its current PoS version, a part of 2022’s Ethereum 2.0 upgrade, aimed to address these concerns by allowing validators to stake their $ETH (the native cryptocurrency of Ethereum) for the chance to validate transactions, create new blocks, and earn transaction fees as rewards. This significantly reduces the energy consumption of the Ethereum network.

What are the advantages of using the Ethereum network on Best Wallet?

Transacting on Ethereum allows you to send, receive, and swap Ethereum-based tokens directly within the app. On top of that, it offers several other benefits:

  • Wide Range of Applications: Ethereum's support for dApps and smart contracts means you can access a vast array of services and applications directly with your Best Wallet, from DeFi platforms to decentralised exchanges.

  • Active Community and Development: Ethereum has one of the largest and most active communities in crypto, leading to continuous improvements and updates to the network.

  • High Liquidity and Volume: Ethereum is one of the most widely traded cryptocurrencies, ensuring high liquidity and ease of exchange.

  • Presale Participation: Ethereum's extensive ecosystem includes numerous token presales and ICOs, providing Best Wallet users with opportunities for early investment.

Ethereum’s native token

At the heart of the Ethereum network is its native cryptocurrency Ether ($ETH). Launched alongside the network in 2015, Ether has grown to be one of the most prominent digital currencies in the world today, reigning as the second-largest crypto by market capitalisation.

Unlike Bitcoin, which is often seen as a store of value, Ether is integral to the functioning of the Ethereum ecosystem. It serves multiple purposes here, making it more than just a digital currency.

$ETH is used to pay gas fees (otherwise known as transaction fees) for computational services, enabling the execution of smart contracts and dApps. Additionally, with Ethereum’s shift to PoS, the token can be staked by holders to secure the network and earn rewards.

Beyond its utility in network operations, Ether is also integral to the decentralised finance (DeFi) ecosystem, and in the creation, purchase and sale of non-fungible tokens (NFTs), making it a cornerstone in Ethereum’s extensive digital economy.

Moving tokens to and from Ethereum

Transferring tokens between the Ethereum network and other networks requires a process known as "bridging".

This is crucial because tokens held in a wallet on one network are not automatically usable on another network, even when using a versatile interface like Best Wallet.

You will soon be able to swap your tokens cross-chain (cross-network) in Best Wallet. To keep up-to-date on all the feature releases and updates, follow Best Wallet's social accounts.

Things to remember

If you currently use or want to use the Ethereum network in Best Wallet, ensure you own Ethereum’s native token, $ETH. Owning an amount of $ETH tokens will allow you to successfully swap and send any Ethereum-based tokens, as you will need $ETH to pay the gas fees on the Ethereum network.

You can buy $ETH directly in Best Wallet through Onramper and their trusted third-party fiat-to-crypto providers.

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